MIGDAL HAEMEK, Israel, July 26, 2018 (GLOBE NEWSWIRE) -- TowerJazz (NASDAQ:TSEM)  (TASE:TSEM) reported today its results for the second quarter ended June 30, 2018.

Highlights for the second quarter:

• Revenues of $335 million, up 7% sequentially;
• Substantial sequential increase in gross, operating and net profit, up 19%, 39% and 45% respectively;
• Net profit of $38 million, up 45% over prior quarter, resulting in basic EPS of $0.38, up $0.11 over prior quarter;
• Cash from operations of $77 million and free cash flow of $37 million;
• Strengthened financial structure by prepaying $40 million U.S. wholly owned subsidiary loan and replacing TPSCo $100 million long-term loan with improved terms.

Business Outlook
Revenues for the third quarter of 2018 are forecasted to be approximately $335 million, with a range of ±5%; targeting fourth quarter record revenues of about $360 million to $380 million.

Mr. Russell Ellwanger, Chief Executive Officer of TowerJazz, commented, “We are pleased with the second quarter improvement in our results and particularly the margins’ growth, allowing us to bring over half of the quarterly incremental revenue to the bottom line, consistent with our margin model. The third quarter contains the proper wafer start plan and product mix to transition us to a fourth quarter targeted record revenue. For the third quarter, we continue to see weakness in the mobile sector with recent reductions in customer demand. For the SiGe infrastructure technology, given its strong and higher than originally expected customer demand, and hence the high number of customers and flow variants that needed to be qualified, the shipment profile from recently added capacity is pushed out slightly. Customers were notified of increased SiGe capacity and starts have been maximized, expecting full revenue realization in the fourth quarter. As our customers’ mid to long term demand for SiGe exceeds our newly acquired capacity, we have invested in additional CapEx for our Newport Beach facility, targeted to come on line in the first quarter of 2019. Additionally, demand remains strong for discrete Power and all 300mm offerings.” 

Ellwanger further commented: “During the first half our major focuses were: (1) qualifying incremental SiGe capacity to optimize our production mix for the high end infrastructure market whilst moving RFCMOS parts to other factories, predominantly San Antonio and replacing some low margin mobile business, (2) ensuring 300 mm manufacturing capability, enabling third quarter RF, Power and CIS start ramps with high yielding flow capability; and (3) multiple organic activities, increasing our served markets, for continued mid to long-term high margin growth. In line with this, our second half main growth drivers remain 300mm production ramp and increased SiGe capacity to meet the very high and still growing customer demand.”

Second Quarter 2018 Results Overview
Revenues for the second quarter of 2018 were $335 million, reflecting a 7% increase over the prior quarter.

Gross and operating profits for the second quarter of 2018 were $79 million and $44 million, respectively, $12 million higher as compared to $66 million and $32 million, respectively, in the first quarter of 2018. This represents quarter over quarter incremental increase of 55% margins as compared to the $22 million revenue increase.

EBITDA for the second quarter of 2018 was $96 million, an $11 million and 13% EBITDA growth as compared to $84 million in the prior quarter.

Net profit for the second quarter of 2018 was $38 million, or $0.38 basic earnings per share, as compared to $26 million or $0.27 basic earnings per share in the prior quarter.

Free cash flow for the quarter was $37 million, with $77 million cash flow from operations and $40 million investments in fixed assets, net. The other main cash activities during the second quarter of 2018 were $15 million investment in marketable securities and $4 million of debt received, net of debt repaid.

Cash (including marketable securities), net of gross debt, as of June 30, 2018, totalled to a record of $276 million as compared to net cash of $247 million as of March 31, 2018 and $226 million as of December 31, 2017.

Shareholders' equity as of June 30, 2018 was a record $1.1 billion, as compared to $1.07 billion as of March 31, 2018 and $1.03 billion as of December 31, 2017.
On April 30, 2018, the Company and its bonds series G have received an upgraded rating from Standard & Poor’s, Israeli subsidiary, Ma’alot (an Israeli rating company that is fully owned by S&P Global Ratings). Its previous rating was ilA+ with a stable horizon and the new upgraded rating is ilAA-, with a stable horizon.

In June 2018, TPSCo restructured its outstanding loans originally due 2018-2020, which carried variable interest rates of TIBOR plus 1.65% to TIBOR plus 2%, by early repaying these loans and obtaining a new approximately $100 million loan from three leading Japanese banks at better terms and longer duration. The new loan final maturity date is June 2025, includes three years grace period followed by nine equal installments from June 2021 to June 2025, and carries a fixed interest rate of 1.95% per annum.

In July 2018, the Company early repaid the $40 million loan, initially borrowed in 2016 from JA Mitsui (US), in relation to the acquisition of the San Antonio fab from Maxim and its ramp. The loan carried annual interest of ICE LIBOR plus 2%, hence its early repayment will save the Company $1.5 million to $2 million per annum in interest and fees.

Teleconference and Webcast

TowerJazz will host an investor conference call today, Thursday, July 26, 2018, 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 second quarter 2018 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 on TowerJazz’s website 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 and (2) compensation expenses in respect of equity grants to directors, officers and employees. 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 in accordance with GAAP, excluding financing expenses, net, other income, net, taxes, non-controlling interest, depreciation and amortization expense and stock-based compensation expense. 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, 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, as used and/ or presented in this release, is comprised of cash, cash equivalents, short-term deposits and marketable securities (in the amounts of $627 million, $590 million and $560 million as of June 30, 2018, March 31, 2018 and December 31, 2017, respectively) less the outstanding principal amount of bank loans (in the amounts of $140 million as of June 30, 2018 , and $138 million as of March 31, 2018 and December 31, 2017, respectively), the outstanding principal amount of capital leases (in the amounts of $31 million, $25 million and $16 million as of June 30, 2018, March 31, 2018 and December 31, 2017, respectively) and the outstanding principal amount of debentures (in the amount of $180 million as of June 30, 2018, March 31, 2018 and December 31, 2017, respectively). The term Net Cash 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 (in the amounts of $77 million, $75 million and $84 million for the three months periods ended June 30, 2018, March 31, 2018, and June 30, 2017, respectively) less cash for investments in property and equipment, net (in the amounts of $40 million, $40 million and $41 million for the three months periods ended June 30, 2018, March 31, 2018, and June 30, 2017, 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.