Amkor Technology, Inc. Investor Presentation

Transcription

1 Amkor Technology, Inc. Investor Presentation May 2013 Enabling a Microelectronic World

2 Disclaimer Forward-Looking Statement Disclaimer All information and other statements contained in this presentation, other than statements of historical fact, constitute forward-looking statements within the meaning of federal securities laws. These forward-looking statements involve a number of risks, uncertainties, assumptions and other factors that could affect our future results and cause actual results and events to differ materially from our historical and expected results and those expressed or implied in these forward-looking statements. Our historical financial information, and the risks and other important factors that could affect the outcome of the events set forth in these statements and that could affect our operating results and financial condition, are contained in our filings with the Securities and Exchange Commission, including our Form 10-K for the 2012 year and subsequent filings. We undertake no obligation to review or update any forward-looking statements to reflect events or circumstances occurring after this presentation. Policy Regarding Prior Guidance and Forward-Looking Statements From time to time we may provide financial guidance in our earnings releases and make other forwardlooking statements. Our financial guidance and other forward-looking statements are effective only on the date given. In accordance with our policy, we will not update, reaffirm or otherwise comment on any prior financial guidance or other forward-looking statements in connection with this presentation. No reference made to any prior financial guidance or other forward-looking statements in connection with this presentation should be construed to update, reaffirm or otherwise comment on such prior financial guidance or other forward-looking statements Amkor Technology, Inc. Amkor Confidential Information 2

3 Leading Outsourced Packaging & Test Provider Industry Pioneer and Technology Leader Driving Innovation for Over 40 Years In the Right Markets with the Right Customers Strong Competitive Position Within Growing OSAT Industry 2013 Amkor Technology, Inc. Amkor Confidential Information 3

4 Key Financial Highlights: LTM 1Q13 Investing for Growth Opportunities Debt Increasing in Line with Improving Profitability and Growing Cash Flow Debt/EBITDA Under 3.0x $2.79 Billion Net Sales EBITDA (1) $542 Million Adjusted (2) $592 Million Net Income $43 Million Adjusted (2) $95 Million (1) EBITDA is defined as net income before interest expense, income tax expense and depreciation and amortization - Refer to reconciliation of Non-GAAP measures in the appendix (2) Adjusted EBITDA excludes $50 million cost of goods sold portion of loss contingency charge. Adjusted Net Income excludes $56 million loss contingency charge ($52 million, net of tax) - Refer to reconciliation of Non-GAAP measures in the appendix 2013 Amkor Technology, Inc. Amkor Confidential Information 4

5 Growth Drivers End Markets In the Right Markets Significant Penetration in Key Devices Deep Ties with the Right Customers Strong OEM Presence Technology and R&D Packaging and Test Industry Flip Chip Growth Fine Pitch Copper Pillar Platform Wafer-Level Processes 3D Packaging MEMS Manufacturing Cost Reductions Semiconductor Unit Growth IDM Outsourcing and Fab-Lite Model Growth of Fab-Less Design Houses Collaboration and Innovation Note: Silicon interposer image courtesy of Xilinx, TSMC and Amkor 2013 Amkor Technology, Inc. Amkor Confidential Information 5

6 End Market Summary Communications Consumer Computing Networking Other 52% 19% 10% 11% 8% Smartphone Gaming PC / Laptop Server Tablet Television Hard Disk Drive Router Automotive Industrial Wireless LAN Set Top Box Peripherals Switch Note: Percentages represent share of LTM 1Q13 Net Sales 2013 Amkor Technology, Inc. Amkor Confidential Information 6

7 Mobile Communications Driving Semi Growth $140 Semiconductor Industry Growth Semiconductor Market Revenues ($ in billions) $120 $100 $80 $60 $40 $20 Growth - $43B CAGR - 10% $ $ F Growth - $6B CAGR - 3% $36 $42 Growth - $6B CAGR - 2% $68 $74 Growth - $15B CAGR - 6% $47 $ $292B 2017F - $380B Growth - $88B CAGR - 5% Growth - $7B CAGR - 5% $25 $32 Growth - $11B CAGR - 4% $47 $58 $0 Mobile Phones & Tablets Consumer Computing Networking Automotive Other* Source: Prismark Partners. February 2013 * Other includes Medical, Industrial, Military and Aerospace 2013 Amkor Technology, Inc. Amkor Confidential Information 7

8 Significant Penetration in Key Devices Smartphone & Tablet Connected Home Networking Server Applications Processor Digital Baseband Memory Audio Processor WiFi, Bluetooth, GPS, FM Radio Power Management MEMS Sensors RF / RFPA Touch Screen Controller CPU Signal / Image Processor Memory Digital Tuner Decoder Audio Processors CPU ASIC / PLD Memory I/O Control Bus 2013 Amkor Technology, Inc. Amkor Confidential Information 8

9 Deep Ties with the Right Customers Customer Share of 2012 Net Sales: Top 10-62% / Top 25-84% 2013 Amkor Technology, Inc. Amkor Confidential Information 9

10 Flip Chip & Advanced Packaging Leader Migration to Flip Chip, 3D and Advanced Packaging Continues to Accelerate LTM 1Q13 Flip Chip & Advanced Packaging Revenue Driven by Strong Demand for Smartphones, Tablets, Consumer Electronics, Network Infrastructure ($ in millions) $1,230 Enhances Device Performance, Reduces Power Consumption and Form Factors $800 $530 $870 Higher Gross Margin and Returns Versus Wirebond STATS SPIL ASE Amkor Non-Amkor Sources: Company Press Releases 2013 Amkor Technology, Inc. Amkor Confidential Information 10

11 Packaging and Test Industry Growth Drivers Semiconductor Unit Growth 6% CAGR from 2012 to 2017 (1) OSATs Growing and Gaining Share IDM Outsourcing Fab-Lite model gaining momentum Some not investing in new packaging and test technologies Some shedding assets to OSATs Growth of Fabless Design Houses (1) $70 billion revenue in % of total IC market in 2012 Up from 9% in 2000 OSAT Share of Total P&T Market 55% 50% 45% 40% $21B 44% $24B 51% $35B 55% Collaboration and Innovation OSATs no longer just overflow capacity 35% F (1) The McClean Report. February Source: Gartner Semiconductor Assembly and Test Services, Worldwide, 1Q13 Update 2013 Amkor Technology, Inc. Amkor Confidential Information 11

12 World-Class Manufacturing Infrastructure, Scale and Scope China 1.0M sf Korea 2.3M sf LTM 1Q13 Net Sales and Packaged Units by Factory Location 13% 12% 4% 3% 10% 6% 18% 49% C 53% Taiwan 850k sf c Japan 210k sf Net Sales 32% Units Philippines 1.4M sf Korea Philippines Taiwan China Japan 5.8 Million Sq. Ft. Manufacturing Space 2013 Amkor Technology, Inc. Amkor Confidential Information 12

13 Amkor Capturing Value in the Japanese Semiconductor Market J-Devices Growth Amkor Ownership Increasing Largest Japanese OSAT Focused on Wirebond Products for Consumer Electronics, Automotive and Industrial End Markets Capturing On-Island Business Through Acquisitions - Fujitsu in Agreement for Renesas in 2013 Principal Customers to Include: Joint Venture: Amkor, Toshiba, Original Owners of J-Devices Predecessor Initial 30% Ownership - $17 Million Exercised Option to Increase Ownership to 60% - $67 Million Equity Method of Accounting due to Minority Shareholder Rights Leverage Relationships to also Capture Off-Island Business 2013 Amkor Technology, Inc. Amkor Confidential Information 13

14 First Quarter 2013 Summary (In millions, except per share data) 1Q Q 2012 Actual Adjusted (3) 1Q 2013 Net Sales $655 $723 $723 $688 Gross Margin 16% 16% 18% 17% Net Income $12 $7 $27 $13 Earnings Per Diluted Share $0.06 $0.05 $0.13 $0.07 Free Cash Flow (1) ($65) ($49) ($49) ($14) EBITDA (2) $126 $139 $159 $140 Packaging Utilization 73% 77% 77% 76% (1) Free cash flow is defined as operating cash flow less purchases of property, plant and equipment - Refer to reconciliation of Non-GAAP measures in the appendix (2) EBITDA is defined as net income before interest expense, income tax expense and depreciation and amortization - Refer to reconciliation of Non-GAAP measures in the appendix (3) Excluding loss contingency accrual of $22 million ($20 million cost of goods sold, $2 million interest expense. $20 million, net of tax) - Refer to reconciliation of Non-GAAP measures in the appendix 2013 Amkor Technology, Inc. Amkor Confidential Information 14

15 Profitability Trends Revenue and Gross Profit ($ in millions) Selling, General & Administrative and Research & Development ($ in millions) $3,500 30% $300 30% $3,000 $2,500 $2,000 $1,500 $1,000 $500 $2,939 23% $664 $2,776 $2,760 $2,792 18% 15% 16% $491 $424 $434 25% 20% 15% 10% 5% $250 $200 $150 $100 $50 $242 $247 $217 $219 10% 11% 10% 10% $48 $50 $54 $55 25% 20% 15% 10% 5% $ LTM 1Q13 0% $ LTM 1Q13 0% Revenue Gross Profit Gross Margin % SG&A R&D SG&A and R&D % of Rev 2012 and LTM 1Q13 Adjusted Gross Margin of 17% (1) (1) Excludes $50 million cost of goods sold portion of loss contingency charge - Refer to reconciliation of Non-GAAP measures in the appendix 2013 Amkor Technology, Inc. Amkor Confidential Information 15

16 Free Cash Flow and EBITDA Free Cash Flow (1) ($ in millions) EBITDA (2) ($ in millions) $97 $676 $50 $521 $527 $542 ($93) ($144) LTM 1Q LTM 1Q and LTM 1Q13 Include $20 Million Payment for Loss Contingency 2012 and LTM 1Q13 Include $50 Million for Loss Contingency Charge (1) Free cash flow is defined as net cash provided by operating activities less purchases of property, plant and equipment - Refer to reconciliation of Non-GAAP measures in the appendix (2) EBITDA is defined as net income before interest expense, income tax expense and depreciation and amortization - Refer to reconciliation of Non-GAAP measures in the appendix 2013 Amkor Technology, Inc. Amkor Confidential Information 16

17 Capital Additions and Capital Intensity 2013 Capital Additions of Around $525 Million to Largely Support Demand for Mobile Communications from Major Customers Based on Current Demand Expectations. Can be Fluid Over Time, Increasing or Decreasing from Current Expectations. New K5 Factory and R&D Center Total spending of around $400 million for land and construction over the next several years In 2013, around $150 million of spending for land and construction (incremental to $525 million discussed above) LTM 1Q13 Capital Additions Mix Infrastructure / R&D Test 18% 38% 44% Packaging Operating Cash Flow and CapEx ($ in millions) Amkor Capital Intensity Capital Intensity is defined as capital additions as a percentage of net sales ($ in millions) Oper. Cash Flow and CapEx $700 $600 $500 $400 $300 $200 $ $543 $ $517 $467 $534 $525 $389 $ Oper. Cash Flow/CapEx $700 $600 $500 $400 $300 $200 $100 17% $505 16% $453 19% 19% $533 $534 20% 15% 10% 5% $ LTM 1Q13 - $ LTM 1Q13 0% Oper. Cash Flow CapEx Cash Paid Oper. CF/Cash CapEx Capital Additions Capital Intensity % 2013 Amkor Technology, Inc. Amkor Confidential Information 17

18 Credit Profile Excluding Loss Contingency Charge (1) Total Debt, Net Debt and Cash Balance 2012 LTM 1Q13 Debt/EBITDA 2.7x 2.7x Net Debt/EBITDA 2.0x 1.9x EBIT ($M) $207 $213 EBIT/Interest Expense 2.2x 2.2x Debt ($ in billions) $2.0 $1.5 $1.0 $0.5 $435 $405 $1.4 $1.3 $1.0 $0.9 $1.5 $467 $413 $1.6 $1.1 $1.1 $500 $400 $300 $200 $100 Cash Balance ($ in millions) (1) Excludes $56 million loss contingency charge ($50 million cost of goods sold; $6 million interest expense; $52 million, net of tax) - Refer to reconciliation of Non-GAAP measures in the appendix $ LTM 1Q13 Total Debt Net Debt Cash Balance $- Debt/EBITDA and Net Debt/EBITDA EBIT and Interest Expense ($ in millions) EBIT and Interest Expense $400 $300 $200 $100 $ $101 $ $87 $ $163 $98 $ EBIT/Interest Expense LTM 1Q13 $ LTM 1Q13 - Debt/EBITDA Net Debt/EBITDA EBIT Interest Expense EBIT/Int. Exp Amkor Technology, Inc. Amkor Confidential Information 18

19 Debt Maturities Current Maturity Profile as of March 31, 2013: $1,578 Million ($ millions) $255 $345 $400 $300 $250 $105 $150 $0 $5 $0 $23 $ Term loans Senior Notes Convertible Notes Total Pro Forma Maturity Profile as of March 31, 2013: $1,553 Million Pro Forma for Inducement of $250 Million Convertible Notes (1) and Issuance of $225 Million Senior Notes Due 2022 ($ millions) $525 $345 $400 $105 $150 $0 $5 $0 $23 $ Term loans Senior Notes Convertible Notes Total (1) Assumes 100% participation in the exchange offer for the 2014 Convertible Notes C allable N o tes D ue B alance ($ M ) F irst C all D ate C all P rice 7.375% Senior Notes M ay 2018 $345 M ay % Senior Notes June 2021 $400 June % Senior Notes October 2022 $525 October Amkor Technology, Inc. Amkor Confidential Information 19

20 Appendix 2013 Amkor Technology, Inc. Amkor Confidential Information 20

21 Financial Reconciliation Tables ($ in millions) LTM 1Q13 Q112 Q412 Q113 Net Cash Provided by Operating Activities $543 $517 $389 $432 $56 $105 $99 Less: Purchases of Property, Plant and Equipment (446) (467) (534) (525) (121) (154) (113) Free Cash Flow (1) $97 $50 ($144) ($93) ($65) ($49) ($14) Property, Plant and Equipment Additions (Capital Additions) $505 $453 $533 $534 $124 $86 $124 Net Change in Related Accounts Payable and Deposits (59) 14 1 (9) (3) 68 (11) Purchases of Property, Plant and Equipment $446 $467 $534 $525 $121 $154 $113 Net Income $232 $92 $42 $43 $12 $7 $13 Plus: Interest Expense (Including Related Party) Plus: Income Tax Expense EBIT (1) Plus: Depreciation & Amortization EBITDA (1) $676 $521 $527 $542 $126 $139 $140 (1) See discussion of Non-GAAP measures on page Amkor Technology, Inc. Amkor Confidential Information 21

22 Financial Reconciliation Tables ($ in millions) LTM 1Q13 Operating Income $374 $194 $153 $159 Plus: Equity in Earnings of Unconsolidated Affiliate Less: Income Tax Expense (19) (7) (17) (19) Net Operating Profit After Tax (NOPAT) $361 $194 $142 $144 Average Debt $1,399 $1,355 $1,446 $1,466 Plus: Average Equity Less: Average Cash (400) (420) (424) (424) Average Invested Capital $1,506 $1,597 $1,698 $1,726 Return on Invested Capital (ROIC) (1) 24% 12% 8% 8% (NOPAT / Average Invested Capital) Total Debt $1,364 $1,347 $1,545 $1,578 Less: Cash Net Debt $959 $912 $1,132 $1,111 EBITDA (1) $676 $521 $527 $542 Debt / EBITDA Net Debt / EBITDA (1) See discussion of Non-GAAP measures on page Amkor Technology, Inc. Amkor Confidential Information 22

23 Financial Reconciliation Tables We define free cash flow as net cash provided by operating activities less purchases of property, plant and equipment. Free cash flow is not defined by U.S. generally accepted accounting principles ("U.S. GAAP"). However, we believe free cash flow to be relevant and useful information to our investors because it provides them with additional information in assessing our liquidity, capital resources and financial operating results. Our management uses free cash flow in evaluating our liquidity, our ability to service debt and our ability to fund capital additions. However, free cash flow has certain limitations, including that it does not represent the residual cash flow available for discretionary expenditures since other, non-discretionary expenditures, such as mandatory debt service, are not deducted from the measure. The amount of mandatory versus discretionary expenditures can vary significantly between periods. This measure should be considered in addition to, and not as a substitute for, or superior to, other measures of liquidity or financial performance prepared in accordance with U.S. GAAP, such as net cash provided by operating activities. Furthermore, our definition of free cash flow may not be comparable to similarly titled measures reported by other companies. We define EBIT as net income before interest expense and income tax expense. We define EBITDA as EBIT before depreciation and amortization. EBIT and EBITDA are not defined by U.S. GAAP. However, we believe EBIT and EBITDA to be relevant and useful information to our investors because they provide investors with additional information in assessing our financial operating results. Our management uses EBIT and EBITDA in evaluating our operating performance, our ability to service debt and our ability to fund capital additions. However, these measures should be considered in addition to, and not as a substitute for, or superior to, operating income, net income or other measures of financial performance prepared in accordance with U.S. GAAP, and our definitions of EBIT and EBITDA may not be comparable to similarly titled measures reported by other companies. We define return on invested capital ("ROIC") as net operating profit after tax (the sum of operating income plus equity in earnings of unconsolidated affiliate less income tax expense) divided by average invested capital (the sum of average debt plus average equity less average cash). ROIC is not defined by U.S. GAAP. However, we believe ROIC is relevant and useful information for our investors and management in evaluating whether our capital investments are generating stockholder value Amkor Technology, Inc. Amkor Confidential Information 23

24 Financial Reconciliation Tables 4Q LTM 1Q13 Gross Margin 16% 15% 16% Plus: Loss Contingency Charge Divided by Net Sales 2% 2% 1% Adjusted Gross Margin 18% 17% 17% Net Income ($ in millions) $7 $42 $43 Plus: Loss Contingency Charge, Net of Tax Adjusted Net Income $27 $94 $95 Earnings per Diluted share $0.05 $0.24 $0.23 Plus: Loss Contingency Charge per Diluted Share Adjusted Earnings per Diluted Share $0.13 $0.45 $0.44 EBITDA (1) ($ in millions) $139 $527 $542 Plus: Cost of Goods Sold Portion of Loss Contingency Charge Adjusted EBITDA (1) $159 $577 $592 In this presentation we provide adjusted gross margin, adjusted net income, adjusted earnings per diluted share and adjusted EBITDA for the quarter and year ended December 31, 2012, and the twelve months ended March 31, We present these non-gaap amounts to demonstrate the impact of the loss contingency we recognized for the quarter and year ended December 31, 2012, and the twelve months ended March 31, 2013, related to our pending patent license arbitration with Tessera, Inc. However, these measures have limitations, including that they exclude the charges for the Tessera arbitration award, which is an amount that the company may ultimately have to pay in cash. Furthermore, the factors affecting the calculation of the arbitration award are complex and subject to determination by the arbitration panel. Therefore, the final amount of the loss may be more than the amount we have recognized. Accordingly, these measures that exclude the loss contingency should be considered in addition to, and not as a substitute for, or superior to, gross margin, net income and earnings per diluted share prepared in accordance with U.S. GAAP. Above is the reconciliation of adjusted gross margin, adjusted net income and adjusted earnings per diluted share to U.S. GAAP gross margin, net income and earnings per diluted share. (1) See discussion of Non-GAAP measures on page Amkor Technology, Inc. Amkor Confidential Information 24