AMKR - Earnings call transcript Q4 2019

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Operator

Good afternoon ladies and gentlemen and welcome to the Q4 2019 Amkor Technology, Inc. earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will follow at that time.

As a reminder, this conference is being recorded.

the to turn now would call Mr. over I Investor Keenan, Vice of President Vincent Relations. ahead. please Sire, go

Vincent Keenan

conference Leigh. you joining quarter XXXX Amkor's for everyone us fourth earnings year full Thank and afternoon for Good and call. thank you

Joining me Chief and Faust, Megan Kelley, Chief Officer. Executive Financial Officer our are today Steve our

with release afternoon SEC and is earnings press the website. Our available was filed this on our

website. find conference a non-GAAP you financial this measures equivalent use on call, GAAP will our to reconciliation can we the U.S. During and

make about it. as statements for future also expectations will environment We the performance forward-looking we Amkor's our based on see currently

Of different. results course actual could be

Please Please factors, other in uncertainties and that discussed results note refer materially preliminary actual SEC risk that exceptions information differ could the cause final included financial on press be to are data and will our today our results expectations. filings and XX-K. these release Form to for from

the to now, to over Steve. I call turn like would And

Steve Kelley

will joining our Good fourth first afternoon and for full thanks quarter priorities quarter and Today, outlook. the discuss performance, XXXX and our year our I call.

up fourth and up margin above and EPS $X.XX. guidance markets revenue revenue year-on-year. Robust packaging was the X% consumer drove sequentially for was communications quarter Fourth XX% quarter operating range. our in demand and Our advanced was X%

back Looking year. a first on challenging we of with how half am pleased market the XXXX, handled I the environment in

invest in of contributed packaging migrated advanced many strategically to new technologies capacity improvement continued In but strong our markets. to investments into spending second initiatives. advanced quality discretionary The cut half We our high-volume XXXX, and performance.

the market. and the leadership a advanced firm One our now in smartphone which in complementing markets, Amkor's has example is position automotive consumer SiP technology, foothold

deployed radar our which is is well smartphone in fan-out technology, as example best-in-class level applications. Another automotive as wafer now

and the our advanced billion. second technology a SiP in improve And XXXX. of Increased packages, drove to for to Customers on are most package wider increase leveraging our lower and business cost. of full-year markets performance, demand revenue in miniaturize, grew system system particular packages, reliability variety basis, Amkor's X% half now growth of advanced in a advanced $X.X

would half Now markets. key our in review and year, accounted In second experienced In growth the of XXXX year-on-year. launches. in successful some I flagship XX% performance by revenue strong assistance the package and like applications Driver double communications, in participation automotive fuelled much industrial, for phone target to digit growth. infotainment of we grew our that advanced

advanced of SiP in Finally, impressive engagement half year. second in the the new consumer our growth drove

half, In successful our we a challenging business half, We in as more momentum of flow of model market revenue revenue was the flow. our million leverage surged. improvement under business XXXX in year consecutive profitability, a drove $XXX and demonstrated Amkor. the We than exited first significant the XXXX, free In model in resiliency generated conditions. for significant the second cash cash marking the year positive balance with year strong fifth free in sheet.

spur the upgrade expected Amkor a XXXX. where increase In forward, management growth strong. Demand expect the most cycle Much phone. an come as is to XG of communications, are our is ramp we be robust about optimistic markets target strong. Looking we of technology to in will electronic well the power areas, module of additional as per and content RF in in content

course grow. to also the package we Over the revenue of and antenna expect year,

the consumer, for opportunity In requirements and performance expand Amkor. miniaturization continue to

a fit into to for customers of is advanced space. squeeze very lot a trying SiP a Our natural technology functionality small

continuing storage benefit data increase, generation, performance particularly in and modules high This we for continues growth longtime and need strength of advanced data Amkor to from the computing, for and area processing, is to applications. center a chips for the In transmission. expect

growth we continued packaging. automotive, advanced in foresee In

market. the from the assist data driver migrate and systems infotainment As midrange continue of into to intensive the high-end

same, Our the yields, satisfaction. customer building XXXX quality of blocks service These technology. priorities customer high are remain continuous and in the best-in-class great improvement,

in this $XXX increase increase We and will capability. capital $XX advanced of expenditures CapEx million used year, package expect Most million an capacity be to approximately of over this XXXX.

to midpoint of quarter the markets. first foresee guidance, up to We forecast. and X% continued communications demand and revenue Now let's down we year-on-year move the strong At in sequentially. our be expect XX% consumer

Coronavirus to health factory few I fully staffed all would our are to with their is a employees. network, priority and customer Throughout production strong first our our Amkor quarter we and like our effect measures on and close have The That to of is forecast. the meet ensure Today, on sufficiently words the to containment priority. first next well-being our for customers. operational factories safeguard taken output demand. efforts protective

are with isolated some relatively supply We issues. dealing minor

forecast issues the well those Coronavirus quarter At as meaningful have the of outbreak. costs in a as protection associated supply seen incremental our first into Our with this we as no our demand takes account profile result efforts. point, employee changes

growth for setting strong for growth XXXX advanced drivers a of the markets multiple automotive. year key advanced I summary, and The as packaging In in include up XG, rollout Amkor. SiP

provide financial will detailed more information. now Megan

Megan Faust

points I increased and full quarter fourth results you quarter Fourth comments and some both review Thank Steve outlook. year our good afternoon X%, quarter will everyone. and sales then first about Today, our provide operating points XX.X% billion. XXX the income up ago quarter. of sequentially from to increased and $X.XX is year-over-year, And to Gross basis XXX basis year-over-year margin XX%. a margin record year

this our was leverage profitability in a result model. the improved direct of quarter Our

benefits quarter, includes anticipated. tax not We the earned in of share per which $X.XX fourth approximately we had $X.XX

We million nearly EBITDA $XXX was margin also generated and of EBITDA XX%.

of As Steve was two mentioned halves. year XXXX earlier, contrasting a

the XXXX the stronger of was inventory growing half over revenue half first first impacted XX% much half. was correction, by the second While

in XXXX so lower the returned growth we us any second expect fixed leverage positioned revenue to the reminder, XX% relatively change in drop the to a measures control profit. profitability mitigated half. of impact we first through on half strong XX% have typically As of costs, sales high dollar in Cost for to when and gross

XXXX revenue of than through gross Less profit. to XX% the flow decline

$X income generated we due operating primarily XX XXXX only to expense X.X%. million was from in senior and term of result, for of operating declined a our only the impact XXXX. year million or declined $XXX a margin points million income X.X% Interest from year of basis redemption XXXX of the loan proceeds interest of $XXX a with notes rate This full of with X.XXX% X%. fixed the As

EBITDA million Net discrete $XXX year of income an $XX in related XXXX. of million Net $XXX and generated million charges EPS. was $XXX reduced and income with our The X% XXXX. reduction of represented income million the of due $X.XX margin an XX.X% for the notes million early by We of senior EBITDA per share. redemption our $X or to items non-cash of was these combination charge tax in

investments approach In XXXX. took by to in advanced response increase high capability reduced million to maintain CapEx cautious expected in and that growth as technology. support payments and well to targeted strategic down CapEx programs a we investments quality million as the capacity pragmatic XXXX. These We We packaging are $XXX standards. from our for XXXX in $XX in inventory XXXX correction, to model

discipline XXXX, balance The improved flow million cash cash year cash free in with positive Strong and consecutive meaningfully. $XXX our our benefits on our second for flow. marking half ratios revenue cost control free have of resulted fifth are reflected flow of our free sheet and of our combined consistent CapEx credit

approximately at our syndicated interest of $XXX with to into cash including of the entered timing that quarter, as proceeds to primarily are foreign December a annual term with the fixed foreign interest were After $X balance bank a debt fourth bank XXXX. to Due proceeds December was X.XX%. hand. repay of generate loan of of positioned approximately savings fund down $XXX transactions, million million XX, used $XXX million sheet refinancing higher liquidity new During paydown $X.X debt we XX giving these and expected the of of and rate in corresponding to total includes the the paid well rate to on we the January future The forma is of effect growth million. billion, pro liability

impact mentioned, today an supply for the we labor outbreak. we chain Coronavirus our As the included Steve know on have due constraints based increased to estimate guidance costs in and of what

margin be restructuring we cost be operating XX.X% billion. $XXX to QX revenue expect million. and due expected expect We billion Gross the XX.X%. The to to in QX, around of of to In primarily between range expenses $X.XX in is $X.XX increase is Japan. QX from

are effective lowering full tax We year our rate around to XX%.

in of expect to between net QX of $XX We $X.XX million income share. and per $X.XX $XX million

$XXX million. Our capital expenditures XXXX is forecast around for

up will we the now Operator? that, call for your open With question.

Operator

Instructions]. [Operator

Bank. Your Sidney from first Ho question from is Deutsche

is open. Your now line

Sidney Ho

on Great. question congratulations the Thank you first quarter My on China and guide. good is Coronavirus impact. and

impacted that you Can that and supply goods of operating related quantify You talked your of how terms that. about minor impact issues revenue, expenses? some help sold in us cost to

Steve Kelley

of a get few but of parts where the out you to within exact Chinese we basically on pretty granular factories. going let Sidney, Yes. components analysis. we were top sourced supply identified team the items And for the manufacturing see through most our mitigate and have didn't too shortfalls alternative quarter. we were The early on are of that sources issues piece the of a me the there and walk way we not to just number,

those plant our forecast. our into incorporated manufacturing we QX financial So and thereby shortfalls into

Sidney Ho

I will next Maybe Okay. to one. move on

down can should a the the should down, low relative we rate of with consumer, your And generally more, about sequential is we compared bit growth beyond when question seasonality continued on you digit, clearly, how of guiding you outside in revenue think XQ about seasonality? that normal but X%. your segments and consumer Steve, other growth think the revenue communications overall I little high And a I about about quarter? talked single first think to strength how to are revenue basis. growth extend teens,

Steve Kelley

QX, Sure. down forecasting of are XX Sidney, sequentially. and up QX in again XXXX so from XX% we

we same should January. consumer at high the SiP similar quarter, also volume in communications. We we In the into ecosystem to that in addition saw volume continued demand fourth product, saw continue to be strength which iOS see running

strong most of flagship the There the us launched phones a to in be towards space. expect that relatively that We also are be of the helping quarter. for QX, end of couple will which are communication

think project to general digits. seasonal. market, the I look the SiP single and beyond you high to looks consumer that beyond It's mid down you when look and pretty communications

in year. the expect about normal would it's what we So

Sidney Ho

Great. last may. question, That's I if helpful. My

So your expect. little is more for I decline lower down margin a sequentially, gross understandable revenue. QX But given is the than guidance which is

of through are And what the other should think we factors you the than going year, great. of revenue go be to the get? product some gross how as help will and margin the maybe you et to If can specifically QX, bridge related increase, to that mix market from cetera., is us benefit fringe QX you depreciation, mix, about incremental remainder are the much

Megan Faust

Sidney, I Okay. your on start with so QX. will question

as our of QX XX%. the Things know, tailwinds. guideline flow you QX utilization, is modeling our et include XX% is generally through flow that. flow currency, you can can through shy impact for mentioned, So mix, foreign as to to various Those cetera. product through, headwinds or And from

to higher a we as such QX, as and are advanced content, QX, compared in chip. forecasting packages shift material mix So flip to product SiP

what's through. So this would the you as flow the model. constraining declining, expect manufacturing Fixed normal actually is in costs are

nothing there So happening is there. unusual

we do respect With year SiP. growth continued percentage, year, as reminder, relates we the material have guidance. question to don't advanced it the to But your as full give to in full on expect a

guideline. QX for exit full could you the use as the are So a year, looking amount as you probably

to Just market. you underutilization though, still general in we remind are experiencing the

so that benefit the will that later year. the does gross margin in market And expected general recover, once

Sidney Ho

Very helpful. Thanks.

Operator

Your Suisse. next Abrams from Credit Randy question from is

Your open. line now is

Randy Abrams

on maybe Coronavirus and first on you first good job Thank follow-up Yes. situation. ask, the wanted results. to Hi. I

having is just of back? then the delay If I of point having you of now. little bit terms factories constraints? more with talk of I a seeing further could material maybe the maybe I the the maybe call some on are step unknown where am bit am of the are And curious, what coming kind a factor tricky a just bottlenecks, directly you a in guess some

am both it getting of moving kind how are now also further guidance? just or impact the then you what's curious feedback the you the in China? whether it's and downstream happening from much full but the Just production into I on impact are feedback So demand factoring part, getting a

Steve Kelley

like on things the they and into very lids forth bottlenecks, run Yes, Okay. capacitors so we parts, and basically that small are issues.

there QX. causing guidance are parts, for on couldn't few this So of for a them, those for little most That's available. alternative quarter. we us back But find our up what alternatives to a of bit is

we wirebond earlier, have like As demand seen as I have not seen our far increases anything except demand the some in factories outside signals, in picture in the demand China. said change we

there additional booked to customer orders additional we that China or shortages. revenue have so concerns attribute some And we some about

we naturally, we XX China. are advantage Amkor factories, have as And outside which of have one is that XX

that a bit chains. helping supply So alternative customers helps quite in with up us our come

second demand part other there. the any signals of Now was we out your see question regarding

I concerns short well valid. other are are in supply. think customers on your gathering our maybe that as data Obviously parts

on that monitoring are basis. We situation daily It's fluid. a

course, of into daily then are end of some our But to And are China, out through basis. if in going time on book. a to demand, order particularly monitor changes that's going customer there that to take filter

Randy Abrams

deal where China the as to take? how And and a I you China the market think reference be this labor where market? like to is the end if if demand maybe any how how maybe to demand, probably a of your just just from how much much direct you to And Great. Okay. your from view is if coming then follow-up, demand know parts difficult back is in us if side, from all it's or give see much had with one And China but could there's for impacted go, of of kind customer, of production then impacted could kind much I have slowdown demand customer? of the can factory your out a measures you direct like

Steve Kelley

Yes.

factory, you is the our is are questions, China one two about So different the about China let me, other market. think I asking

So let order. in take just those me

move So We our quickly. China factory operating well. is

basic was employees. for the closest approach put Our to relatively employees

So to it's than actually it Amkor outside go safer to work at is world. into the

a aspects our enhanced so factory. number We we the improved of and forth. so within And meals

We enhanced our screening.

the and and And like So so customers temperature non-central includes we the body shut forth. personal. And factories hand our things washing, eliminated checks, visits travel. to it usual by we masks finally, down

a factory created have we pretty safe the think environment within I So in China.

shift adjusted speed. to full so or the also at We allows us it factory more the running that schedules keep less

very am measures happy in unabated I China have output the the point. So continues and at taken with this that we

demand, just impact wait we orders China. the and for except been that's meaningful what have to we the some and regards again With to our shifts wirebond order China But has today, haven't thing have see additional received we on that will any book. market outside our see seen in factories

Randy Abrams

broadening Okay. run on from think the of of you could how that or Maybe on The out that rough And times take you talk for new later terms run if of consumer SiP am with saying when think you growing telling your it side depending and rate the those maybe if in maybe I we in new a kind in the XXXX, I risk see advanced Great. for on you that's curios XXXX? expecting side? for lumpy visibility And because it's your consumer, on the the four, wafer the projects. QX, are projects you is Megan. SiPs how clarification feeling rate are kind that in I fourth wave this are quarter, like any are

Megan Faust

marker mixed comments Yes. it's as our products Randy, respect you I look together suggestion are strong actual, far And my all QX. so not good material getting QX. is and content, because QX SiP elevated with a was to an at made to of at that's least think in the as in there

out et with coming pretty have So material lumpy cetera. as can new projects said, we as on, XXXX, look to seasonality, content you be

is moderate the which that. the would the to think and I general of return to So decent guide that's help forward known market, look then a

Randy Abrams

at my could how this the thinking on risk, next or Like guess you I the least XXXX and design maybe next like about side upside product are the any projects, for side, the are that of question wave or for revenue how at revenue Okay. for peak about traction stage also then you thinking change? and season?

Steve Kelley

Randy, the target. that on Yes. we we about our say XXXX markets in optimistic are would based to have that very position I

phones. there in at new It's will point I expect to recover side, the think think year. market, it the we that XG some are of most the hard in to general break exactly when, recover. communication I on we but And this

automotive, and consumer advanced we in as fighting for for think a will demand the for we clear are more we and we packaging very obviously are we systems. continue as I position positioned leader very increase to XXXX. intensive data great business be got well will head into these Consumer, have

So pretty optimistic. I am

for be XXXX think a to Amkor. going good year I is

Randy Abrams

packaging of actually I That's And of market It looking And Okay. year. looks effectively And the market. the last have pickup. was, you like sluggish lot signals you kind general advanced say, drove for been of on could general great. growth. through a the think question

stage your market, relative You to it Or for growth sluggish going track now like general could say, into again? a industry, it's at how's start XXXX, bit this longer? to view for still like be like looks to you maybe

Steve Kelley

positive particularly I saw in think QX signals, automotive. we some in

So quarters wirebond. in many that after of was revenue declining good

general if think correction from common over. in believe I they the think is market I our total, think customers the about the is, theme inventory

good. that's So

then inventory normal and decide psychology. you real to more run see rate. lead the look When the But and But to tough our how back back to psychology times build orders contracting, one into history, place if and you up are in changes that's fast to And stretch, I more psychology restrict to perhaps do is, Then firm customers answer. recover? not changes start the orders. when the question are and we in we is market

think don't this I happen. time year. know to going it's that's But point, exactly some some I at So when.

Randy Abrams

the Thanks Great. color. appreciate Okay. lot. a I

Steve Kelley

Randy. Thanks

Operator

question from from Krish & Cowen next Sankar is Co. Your

now is line open. Your

Krish Sankar

say or to you this on I year of understand, CapEx to us help a did Can it results. you question advanced kind great today way I It levels. relative that Steve of and my is is like what a taking like quantify XXXX? follow-up. is to Megan, your XXXX, congrats, of a for going one it is had Thanks to and on then had CapEx. the questions. a Number packaging. Hi. Yes. Is lot there looks couple XXXX XXXX, And back it

Steve Kelley

Yes.

year downturn. you the in down, think XXXX had more on levels, of right. it XXXX, very that million on $XXX expanding close to if to it the I spent intend XX% XXXX, we We be are spend I will normal to level CapEx. capacity. break response than of CapEx last It's restricted more But of package that advanced in

flip more So for And advanced see spent than package in demand system and for this that's And per that near wafer quality $XXX on bit level, package be will chip term. wirebond is then on facilities, And for R&D. work wafer-level for improvement successor A on products. remainder fan-out XX% a we will our and of the expansion. spent level capacity potential be fan-out. includes continuing as panel technology our the million

Krish Sankar

And think would be? if the actually a so, for to quantify lag helpful, curious impact? the another And sooner be understand as the hopefully do it. of effect impact the than want lag is subsides, demand snaps Steve. figure virus am to when going the way Very you you to don't is out cannot to later just because like thanks of there a Got kind the I keep giving supply issues demand then with chain up virus. effect because of the back, there what color. follow-up, QX revenues I like

Steve Kelley

I and like into think I people because the as ship on want side to to err that's tough possible building not issues your building answer. certainly But of Really, less more market. Yes. to much think one run you this, as we end into start when a

back So we year. think will come later things this

Krish Sankar

quarter? because demand squeeze Chinese Year. delayed different be time And Got more, earlier. Arguably the it. think year, Do than New back Year Steve. was dynamics New like year ago December of would Chinese this If one back-end I a was in time snaps can after February. typically This you the Last business, just in virus. the was it

Steve Kelley

thing the received of demand in China. additional the outside in haven't we picture Well, any some seen change factories except for is, demand we the our yet, wirebond

speed tell full there see demand. until So us impact we going we our that are is be signals going to on ahead that

Krish Sankar

Thanks lot, Steve it. congrats, Got a and Steve and Thanks, Steve. Megan.

Steve Kelley

Thank calling you for in.

Operator

showing Keenan further no at [Operator would question turn remark. for Vincent like the to back conference to Instructions]. time. I this I am any Mr. closing

Vincent Keenan

now portion Thank the you closing ends Leigh. turn the call of his to remarks. back will This I like question-and-answer to our for Steve call.

Steve Kelley

Yes. key I would to messages. our recap like

First, quarter we a both the fourth with high-end as very revenue XXXX profitability and exceeded out of closed strong expectations.

in quarter you continuing the growth of our given is optimistic today. of drove many Second, markets. momentum which into call our the the And the we finally, coming XXXX. Thank are the joining quarter excellent performance first for fourth about industry's year, highest position

Operator

this Ladies and concludes and today's Thanks a participation day. wonderful have conference. gentlemen, your for

You may all disconnect.

Amkor Technology (AMKR) 10 Feb 202019 Q4 Earnings call transcript