TowerJazz Reports First Quarter 2017 Results: Record Free Cash Flow Resulting from Strong Year over Year Growth in Revenue and Margins

MIGDAL HAEMEK, Israel, May 08, 2017 (GLOBE NEWSWIRE) -- TowerJazz (NASDAQ:TSEM) (TASE:TSEM) today reported its results for the first quarter ended March 31, 2017.

Highlights of the First Quarter of 2017

  • Revenues of $330 million, up 19% year over year;
  • Gross profit of $85 million, up 38% year over year;
  • Operating profit of $53 million, up 71% year over year;
  • EBITDA of $101 million, up 30% year over year;
  • Net profit of $46 million, up 83% year over year (excluding San Antonio acquisition gain);
  • Record free cash flow of $42 million with cash from operations of $82 million;
  • Second quarter revenue guidance with mid-range of $345 million, up 13% year over year; targeting continued growth throughout the year.  

CEO Commentary
Mr. Russell Ellwanger, Chief Executive Officer of TowerJazz, commented, “The first quarter demonstrated a strong year over year growth. We are executing well within each of our targeted analog application markets. During the quarter, we received higher than expected demand for high margin businesses such as RF SiGe optical infrastructure and CMOS Image Sensor business, specifically industrial applications. These orders, which will be shipped throughout the next quarters, further strengthen our belief for revenue and margin growth in the year, with our second quarter guidance reflecting the Company’s highest revenue ever.”

First Quarter Results Overview
Revenues for the first quarter of 2017 were $330 million, reflecting a 19% growth as compared to the first quarter of 2016.

Gross profit for the first quarter of 2017 was $85 million, at a margin of 26%, representing an increase of 38% as compared with $61 million and a margin of 22%, in the first quarter of 2016.

Operating profit was $53 million for the first quarter of 2017, at a margin of 16% and representing an increase of 71%, as compared with $31 million reported in the first quarter of 2016, at a margin of 11%.

EBITDA for the first quarter of 2017 totaled to $101 million, at a margin of 31%. This represents a 30% increase as compared with $78 million, at a margin of 28%, in the first quarter of 2016.

Net profit for the first quarter of 2017 was $46 million, or $0.48 basic earnings per share and $0.45 diluted earnings per share. This is compared with $66 million, or $0.78 basic earnings per share and $0.69 diluted earnings per share in the first quarter of 2016, which included $41 million net gain from the acquisition of the San Antonio facility.

On an adjusted basis, as described and reconciled in the tables below, adjusted net profit for the first quarter of 2017 was $50 million, an increase of 58% compared with $32 million, for the first quarter of 2016.

Net cash (cash and short-term deposits less debt par value) as of March 31, 2017, totaled to $86 million as compared to net cash of $37 million as of December 31, 2016 and net debt of $65 million as of March 31, 2016. Cash and short term deposits as of March 31, 2017 were at a record of $432 million with $346 million of debt outstanding principal amount. The main cash activities during the first quarter of 2017 were comprised of the following: $82 million cash generated from operating activities; $13 million received from the exercise of warrants and options; investments of $40 million in fixed assets, net; $12 million in debt repayments; a TPSCo dividend to Panasonic of $4 million; and a positive $4 million due to the effect of the Japanese Yen exchange rate on the cash balance.

Shareholders' equity as of March 31, 2017 was a record of $746 million, 48% higher than $504 million as of March 31, 2016 and 9% higher than $683 million as of December 31, 2016.

Business Outlook
TowerJazz expects revenues for the second quarter of 2017 ending June 30, 2017 to be $345 million with an upward or downward range of 4%, representing 13% year over year revenue growth as compared to the second quarter of 2016 and 5% sequential quarter over quarter growth.

Teleconference and Webcast
TowerJazz will host an investor conference call today, May 8, 2017, 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 first quarter 2017 and its outlook.

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 (Israel), +972-3-918-0609 (International).  For those who are not available to listen to the live broadcast, the call will be archived for 90 days.

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 in this release, which we describe in this release as “adjusted financial measures”, is 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 one or more of the following: (1) amortization of acquired intangible assets; (2) compensation expenses in respect of equity grants to directors, officers and employees; (3) gain from acquisition, net; (4) Nishiwaki Fab restructuring and impairment cost (income), net; and (5) acquisition related costs. 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, as well as calculated in the tables herein, the term Earnings Before Interest Tax Depreciation and Amortization (EBITDA) consists of net profit, according to U.S. GAAP, excluding gain from acquisition, net, interest and other non-cash financing income (expense), net, other income (expense), net, taxes, non-controlling interest, depreciation and amortization, stock based compensation expenses, acquisition related costs and Nishiwaki Fab restructuring and impairment cost (income), net. 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 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 or Net Debt, as used and/ or presented in this release, is comprised of the outstanding principal amount of bank loans (in the amounts of $166 million, $166 million and $245 million as of March 31, 2017, December 31, 2016 and March 31, 2016, respectively) and the outstanding principal amount of debentures (in the amounts of $180 million, $186 million and $65 million as of March 31, 2017, December 31, 2016 and March 31, 2016, respectively), less cash and short-term deposits (in the amounts of $432 million, $389 million and $245 million as of March 31, 2017, December 31, 2016 and March 31, 2016, respectively). The term Net Cash and/ or Net Debt 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, investing and financing activities, per share data or other profit or cash flow statement data prepared in accordance with GAAP. In addition, the term Free Cash Flow, as used and/ or presented in this release, is calculated to be cash from operating activities (net of interest payments) as this term is defined by GAAP (in the amounts of $82 million, $82 million and $77 million for the three month periods ended March 31, 2017, December 31, 2016 and March 31, 2016, respectively) less cash for investments in property and equipment, net, as this term is defined by GAAP (in the amounts of $40 million, $43 million and $58 million for the three months periods ended March 31, 2017, December 31, 2016 and March 31, 2016, 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, investing and financing activities, per share data or other profit or cash flow statement data prepared in accordance with GAAP.

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