Year Over Year Organic Revenue Increase of 23 % ;
Provides Fourth Quarter Guidance of Continuous Growth, Surpassing $1 Billion Annualized Run Rate
MIGDAL HA'EMEK, Israel, Nov. 11, 2015 (GLOBE NEWSWIRE) -- TowerJazz (NASDAQ:TSEM) (TASE:TSEM) today reported results for the third quarter of 2015 ended September 30, 2015.
- Third quarter 2015 record revenues of $244 million with year over year organic growth of 23% and nine months year over year organic growth of 28%;
- Substantial GAAP margins increase:
- Gross profit of $55 million, 3.8X year over year
- GAAP net profit of $14 million, 74% quarter over quarter increase, and compared to a net loss in the third quarter of 2014;
- Third quarter non-GAAP profits increased by $26 million year over year against $18 million revenue growth:
- Record gross profit of $94 million or 38% gross margin, up 8 points or a 38% increase from the gross profit of the third quarter of 2014
- Record EBITDA of $63 million, 69% year over year increase
- Net profit of $58 million, representing 24% net margin and basic earnings per share of $0.74;
- Engaged key customers for prepaid capacity reservation programs to receive $45 million advance payment in order to meet customer increased demand for 2016 and beyond;
- Strong balance sheet with:
- Record shareholders’ equity of $325 million
- Cash balance of $155 million and
- Net debt of $134 million as compared to $348 million at the end of the third quarter of 2014
- 0.53X net debt to EBITDA ratio.
Third Quarter and Nine Months Results Overview
Record revenues of $244.2 million in the third quarter of 2015, reflecting year over year organic growth of 23% (excluding Panasonic). This is compared with $235.6 million in the prior quarter and $226.0 million in the third quarter of 2014. For the nine months ended September 30, 2015, revenues were $706.0 million, as compared to $592.7 million in the nine months ended September 30, 2014, representing 28% organic growth.
Gross profit, on a non-GAAP basis, for the third quarter of 2015 was $94 million. This represents a 38% gross profit margin and a 38% increase, or 8 points, from $68 million, or 30% gross margin, as reported in the third quarter of 2014. On a GAAP basis, gross profit for the third quarter of 2015 was $55 million, as compared to $15 million in the third quarter of 2014, representing 3.8X of gross margin enhancement.
EBITDA, which is akin to non-GAAP operating profit, was $63 million for the third quarter, 69% higher than the $37 million in the third quarter of 2014. On a GAAP basis, operating profit for the third quarter of 2015 was $24 million, reflecting substantial increase of $41 million over the third quarter of 2014.
Net profit for the quarter, on a non-GAAP basis, was $58 million, resulting in basic earnings per share of $0.74, or 24% net profit margin, an 86% increase as compared to the $31 million reported in the third quarter of 2014, or $0.58 basic earnings per share.
GAAP net profit in the third quarter of 2015 was $14 million, resulting in basic earnings per share of $0.18, substantial improvement as compared to a loss recorded in the third quarter of 2014 of $19 million, which resulted in a loss per share of $0.37, and 74% increase as compared to the second quarter of 2015 net profit of $8 million, or $0.10 basic earnings per share.
Cash as of September 30, 2015 increased to $155 million as compared to $143 million as of June 30, 2015. During the quarter, the Company generated $51 million cash from operations, net of interest payments. Investments in property and equipment, net (Cap-Ex) were $40 million, above the typical quarterly average level, resulting from the execution of its previously announced plan to invest primarily in Fab2 and Fab3 manufacturing facilities in order to increase its capacity and capabilities and support the strong and growing customer demand, exceeding current available capacity.
Shareholders’ equity as of September 30, 2015, was $325 million, an all time record and notably higher than $196 million as of December 31, 2014 with current ratio increase from 1.3X to 1.6X. Net debt as of September 30, 2015 was $134 million, significantly lower as compared with $348 million as of September 30, 2014, reflecting 0.53X net debt to EBITDA ratio.
TowerJazz expects revenues for the fourth quarter ending December 31, 2015 to increase to $252 million with an upward or downward range of 5%, reflecting 21% organic growth and 7% overall growth as compared with the fourth quarter of 2014.
Mr. Russell Ellwanger, Chief Executive Officer of TowerJazz, commented, “Our third quarter results were strong with records in revenue, gross profit and EBITDA as well as significant continued growth in GAAP net profit. We are leading the foundry market in year to date revenue growth as compared to the same period in 2014, both overall with 19% and most especially organic (excluding Micron and Panasonic) with 28%. Both masks entering the factories and design wins were at record levels year-to-date with increases of 13%, vs. the previous record for this same period in 2014. Three strategic customers have recently reserved future capacity for 2016 and beyond, for a present total of $45 million in reservation fees.”
Ellwanger concluded: “The ongoing increase in midterm to long term indicators of record mask sets and design wins, built upon strong financials, and combined with key customers’ growth that is aligned with our capabilities and roadmap, provide us confidence in a very strong 2016 and beyond. We are on track and guiding fourth quarter of this year to achieve our previously announced milestone of breaking a $1 billion annualized quarterly run rate with substantial margins and a model of growing GAAP net profit.”
Teleconference and Webcast
TowerJazz will host an investor conference call today, November 11, 2015, at 10:00 a.m. Eastern time (9:00 a.m. Central time, 8:00 a.m. Mountain time, 7:00 a.m. Pacific time and 5:00 p.m. Israel time) to discuss the Company’s financial results for the third quarter 2015 and its fourth quarter 2015 outlook.
This call will be webcast and can be accessed via TowerJazz’s website at www.towerjazz.com, or by calling: 1-888-407-2553 (U.S. Toll-Free), 03-918-0610 (Israel), +972-3-918-0610 (International). For those who are not available to listen to the live broadcast, the call will be archived for 90 days.
As previously announced, beginning with the third 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 Securities and Exchange Commission as they apply to our company. These non-GAAP financial measures exclude (1) depreciation and amortization, (2) compensation expenses in respect of options granted to directors, officers and employees, (3) Nishiwaki Fab restructuring costs and impairment, (4) TPSCo pre-merger costs, (5) financing expenses, net other than interest accrued, such that non-GAAP interest expenses and other non-cash financial expenses, net include only interest accrued during the reported period, whether paid or payable, (6) Gain from acquisition and (7) income tax expense, such that non-GAAP income tax expense include only taxes paid during the reported period on a cash basis. Non-GAAP 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 non-GAAP financial measures as well as reconciliation between the non-GAAP financial measures and the most comparable GAAP financial measures. As applied in this release, the term Earnings Before Interest Tax Depreciation and Amortization (EBITDA) consists of profit or loss, according to U.S. GAAP, excluding Nishiwaki Fab restructuring costs and impairment, TPSCo pre-merger costs, gain from acquisition, interest and other financing expenses (net), tax, non-controlling interest, depreciation and amortization and stock based compensation expenses. 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 non-GAAP financial information presented herein should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, per share data or other income or cash flow statement data prepared in accordance with GAAP and is not necessarily consistent with the non-GAAP data presented in previous filings.