TowerJazz Announces Second Quarter 2019 Results with Strong

TowerJazz Announces Second Quarter 2019 Results with Strong Organic Growth and Guides Third Quarter Revenue Increase with Continued Organic Growth

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MIGDAL HAEMEK, Israel, July 29, 2019 (GLOBE NEWSWIRE) -- TowerJazz (NASDAQ: TSEM & TASE: TSEM) reported today its results for the second quarter ended June 30, 2019.

Second Quarter Results Overview
Revenues for the second quarter of 2019 were $306 million, reflecting 11% quarter over quarter organic growth (defined as total revenue excluding revenues from Panasonic in the TPSCo fabs and revenues from Maxim in the San Antonio fab). This organic growth of $20 million is offsetting to a great extent the $22 million Panasonic revenue reduction per the revised terms of the previously announced Panasonic contract extension and a Maxim revenue reduction per the San Antonio fab acquisition agreement.

Gross and operating profits for the second quarter of 2019 were $53 million and $18 million, respectively, as compared to $63 million and $27 million, respectively, in the prior quarter. The 11% organic revenue growth and efficiencies enabled the company to mitigate approximately 55% and 60% of the full impact from Panasonic revenue reduction over the gross and operating profits, respectively.

EBITDA for the second quarter of 2019 was $70 million, as compared to $79 million in the first quarter of 2019, also reflecting approximately 60% mitigation of the above described $22 million impact.

Net profit for the second quarter of 2019 was $21 million, or $0.20 diluted earnings per share, as compared to net profit of $26 million or $0.25 diluted earnings per share in the prior quarter.

Free cash flow for the quarter was $28 million, with $72 million cash flow from operations and $44 million investments in fixed assets, net. The other main cash activities during the second quarter of 2019 were $27 million investment in short-term deposit and marketable securities and $7 million debt repayments.

Cash and cash equivalents including short term deposits and marketable securities, net of short and long-term debt, as of June 30, 2019, is $378 million as compared to $374 million as of December 31, 2018.

Shareholders' equity as of June 30, 2019 was a record $1.29 billion, as compared to $1.24 billion as of December 31, 2018.

Capacity Expansion Plan
Following substantial increase in TPSCo’s 300mm foundry utilization and a forecasted customer demand exceeding the current capacity capabilities, TowerJazz is announcing a capacity expansion plan for the Uozu fab in Japan, adding capacity for the highly differentiated 300mm RF SOI, 65nm BCD Power Management and CMOS image sensor platforms and will allocate an amount of about $100 million to this plan. Capacity is targeted to be installed during the first half of 2020.

Business Outlook
TowerJazz expects revenues for the third quarter of 2019 to grow to approximately $312 million, with an upward or downward range of 5%, representing 6% quarter over quarter organic revenue growth.

Mr. Russell Ellwanger, Chief Executive Officer of TowerJazz, commented, “We are pleased with our second quarter results, having achieved strong organic growth and guiding further increased organic and total revenues growth for the third quarter. We are executing on exciting opportunities within all of our business units, many of which segue into new and large served markets. Of particular interest, our 300mm activities have resulted in strong demand and forecasted excess demand for which we are now investing to fulfill.”

Teleconference and Webcast

TowerJazz will host an investor conference call today, Monday, July 29, 2019, at 10:00a.m. Eastern time (9:00a.m. Central time, 8:00a.m. Mountain time, 7:00a.m. Pacific time and 5:00p.m. Israel time) to discuss the Company’s financial results for the second quarter of 2019 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 and other income (expense), 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 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 Free Cash Flow, as used and/ or presented in this release, is calculated to be cash from operating activities (in the amounts of $72 million, $75 million and $77 million for the three months periods ended June 30, 2019, March 31, 2019 and June 30, 2018, respectively) less cash for investments in property and equipment, net (in the amounts of $44 million, $42 million and $40 million for the three months periods ended June 30, 2019, March 31, 2019 and June 30, 2018, 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. With regards to our balance sheet as of June 30, 2019, as disclosed in Note 2Y to our annual financial statements for the year ended December 31, 2018, we implemented ASU 2016-02 “Leases” effective January 1, 2019 with regards to lease right-of-use assets and lease liabilities, which implementation resulted in our lease contracts value presentation under property and equipment, net, short-term debt and long-term debt as of June 30, 2019. In addition, short-term debt as of June 30, 2019 includes $18 million of the first installment payment scheduled in March 2020 for series G bonds.

About TowerJazz

Tower Semiconductor Ltd. (NASDAQ: TSEM, TASE: TSEM) and its subsidiaries operate collectively under the brand name TowerJazz, the global specialty foundry leader. TowerJazz manufactures next-generation integrated circuits (ICs) in growing markets such as consumer, industrial, automotive, medical and aerospace and defense. TowerJazz’s advanced technology is comprised of a broad range of customizable process platforms such as: SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, integrated power management (BCD and 700V), and MEMS. TowerJazz also provides world-class design enablement for a quick and accurate design cycle as well as Transfer Optimization and development Process Services (TOPS) to IDMs and fabless companies that need to expand capacity. To provide multi-fab sourcing and extended capacity for its customers, TowerJazz operates two manufacturing facilities in Israel (150mm and 200mm), two in the U.S. (200mm) and three facilities in Japan (two 200mm and one 300mm). For more information, please visit www.towerjazz.com.

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