TowerJazz Reports Second Quarter 2014 Results

Exceeded $900 Million Annual Run Rate with 40% Year over Year Organic Top 10 Customers’ Growth

MIGDAL HAEMEK, Israel — (BUSINESS WIRE) — August 4, 2014 — TowerJazz (NASDAQ: TSEM & TASE: TSEM) today reports results for the second quarter of 2014 ended June 30, 2014.

Highlights

  • Second quarter revenues of $234 million, up 76% quarter over quarter and 87% year over year; this quarter’s statement of operations report includes Tower Panasonic Semiconductor Co. (“TPSCo”) results for the first time. First half revenues of $367 million, up 54% year over year;
  • Building upon the base Panasonic business annual demand of $360-420 million, first quarter post TPSCo formation evidenced strong new 3rd party customer engagements with potential to reach incremental annual revenue run rate of beyond $100 million at high incremental margin;
  • EBITDA of $33 million for the second quarter of 2014 as compared to $26 million in the second quarter 2013;
  • Organic business growth of approximately 40% year over year for Company’s top 10 customers and 50% for its top 5 customers (excluding Micron and Panasonic) representing 20% and 11% quarter over quarter growth, respectively;
  • End of quarter cash balance of $192 million with $41 million (excluding interest payments) cash from operations generated during the second quarter and strong balance sheet ratios.

Financial Results Overview

Second quarter 2014 revenues were $234.1 million, an increase of 87% as compared with $125.2 million in the second quarter of 2013, and an increase of 76% as compared with $132.7 million in the first quarter of 2014. Revenues for the second quarter of 2014 include TPSCo revenues for the first time, as a result of closure completion on March 31, 2014.

Revenues for the first half of 2014 were $366.7 million, as compared to $237.9 million in the first half of 2013, an increase of 54%.

On a non-GAAP basis, as described and reconciled in the tables below, 2014 second quarter gross profit was $62 million, reflecting 27% gross margins, and an increase of 42% compared to $44 million in the second quarter of 2013, and an increase of 40% compared to $44.5 million in the first quarter of 2014.

On a non-GAAP basis, 2014 second quarter operating profit was $33 million, an increase of 26% as compared to $26 million in the second quarter of 2013, and an increase of 21% as compared to $27 million in the first quarter of 2014.

On a non-GAAP basis, 2014 second quarter net profit was $31 million, an increase of 70% as compared to $18 million in the second quarter of 2013, and an increase of 59% as compared to $19 million in the first quarter of 2014. 2014 second quarter non-GAAP net profit represents $0.62 earnings per share as compared to $0.47 earnings per share in the second quarter of 2013 and $0.40 earnings per share in the first quarter of 2014.

On a GAAP basis, net loss in the second quarter of 2014 was $16 million, representing $0.31 per share, as compared with a net loss of $23 million or $0.59 per share in the second quarter of 2013. GAAP net loss for the second quarter of 2014 included $4 million of non-cash cost resulting from the Nishiwaki Fab cessation of operations in Japan, which was announced in the first quarter of 2014, and a gain from acquisition derived from the high value assigned to Tower’s stake in TPSCo of $15 million, net.

On a GAAP basis, net profit in the first half of 2014 was $23 million, representing $0.47 earnings per share, as compared with a net loss of $46 million or $1.44 loss per share in the first half of 2013. GAAP net loss for the first half of 2014 included the following one-time non-cash items: $76 million of non-cash cost due to Company’s decision to cease the operations of the Nishiwaki fab in Japan and a gain from acquisition derived from the high value assigned to Tower’s stake in TPSCo of $166 million, net.

Cash and short-term deposits as of June 30, 2014 were $192 million, as compared to $123 million as of December 31, 2013 and $183 million as of March 31, 2014. The increase in cash balance during the quarter was attributed mainly to $41 million cash generated from operating activities excluding interest payments of $10 million; investments of $15 million in fixed assets, net; and repayment of $6 million of debt, net.

The increase in cash balance during the first half of 2014 was attributed mainly to $66 million cash generated from operating activities excluding interest payments of $16 million; $58 million of cash in TPSCo associated with its establishment as of March 31, 2014; investments of $24 million in fixed assets, net; and repayment of $14 million of debt, net.

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