Tower Semiconductor records 9% Q3 revenue growth

Russell Ellwanger Photo: Eyal Yizhar

Projected fourth quarter revenue is $358 million, very slightly below the consensus estimate.

Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM), which trades as TowerJazz, has reported $355 million revenue for the third quarter of 2017. This represents 9% growth in comparison with the $326 million recorded in the third quarter of 2016.

EBITDA for the third quarter of 2017 was a record $109 million, or 31% EBITDA margin. This compares with $97 million in the third quarter of 2016.

Net profit for the third quarter of 2017 was $55 million, which compares with $51 million in the third quarter of 2016. Basic earnings per share for the quarter was $0.56 and diluted earnings per share was $0.54, which compare with $0.58 and $0.52, respectively, in the third quarter of 2016. On an adjusted basis, net profit for the third quarter of 2017 was a record $61 million, 24% more than the $49 million profit posted in the third quarter of 2016.

Tower explained that "As our TPSCo foundry business and revenue continues to grow, we reached a profitability level entailing royalties to TowerJazz and Panasonic. This results in a higher cost of revenue, proportionally yielding a lower gross margin; creating a lower tax expense and lower non-controlling interest, which in turn generates greater net profit, cash and free cash flow. This is seen in the 55% incremental net profit margin increase as compared to the second quarter of 2017."

Free cash flow for the quarter was a record of $62 million, with a record $104 million cash flow from operations and $42 million investments in fixed assets, net. Cash (including marketable securities), net of gross debt, at the end of the third quarter totaled $195 million, which compares with net cash of $37 million at the end of 2016.

For the first nine months of 2017, revenue totaled $1.03 billion, representing 13% growth in comparison with the $909 million revenue recorded in the first nine months of 2016. Year over year organic growth, excluding the Panasonic and Maxim long-term committed contracts, was 27%.

Net profit for the first nine months of 2017 was $151 million, or $1.57 in basic earnings per share and $1.49 diluted earnings per share. Net profit for the first nine months of 2016 was $156 million, or $1.81 basic earnings per share. The 2016 figures include $51 million net gain from the acquisition of the San Antonio fab, $6.5 million income tax benefit in relation to Nishiwaki closure occurred in 2014 and $7 million non-cash financing expenses relating to the Israeli banks’ loans early repayment.

Tower expects revenue for the fourth quarter of 2017 to be $358 million, with an upward or downward range of 5%, representing annual year over year growth of 11% with 20% organic growth. The consensus analysts' estimate is for fourth quarter revenue of $358.88 million.

Tower Semiconductor CEO Russell Ellwanger said, “Our third quarter of 2017 top and bottom line growth, with incremental net profit outpacing revenue growth, demonstrates continued value creation to our customers and shareholders. In the past few months, we announced two of multiple on-going initiatives in China, as well as a variety of important global automotive activities, including offerings, partnerships and 1st-tier customer relationships.

"This, combined with other customer partnered roadmap developments, including several disruptive technologies, further entrench and broaden our capabilities within the analog space, strengthening our competitive advantage, cementing our position as the leading analog specialty foundry.”

Tower's share price is up slightly, by 0.17%, on the Tel Aviv Stock Exchange this morning, at NIS 114.90.

Published by Globes [online], Israel business news - www.globes-online.com - on November 7, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Russell Ellwanger Photo: Eyal Yizhar
Russell Ellwanger Photo: Eyal Yizhar
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