MIGDAL HAEMEK, Israel, Nov. 13, 2023 (GLOBE NEWSWIRE) -- Tower Semiconductor (NASDAQ: TSEM & TASE: TSEM) reports today its results for the third quarter ended September 30, 2023.

Highlights

• Entered into a capacity corridor agreement with Intel, enabling Tower additional high-volume 12-inch capacity.
• Third quarter 2023 revenue of $358 million, as compared to $357 million for the second quarter of 2023.
  
• Net Profit for the third quarter of 2023 of $342 million, including $290 million net profit from the merger contract termination fee received from Intel.
  

Mr. Russell Ellwanger, Chief Executive Officer of Tower Semiconductor, stated: “This past period has been most significant putting in place (1) added capacity, capable to drive substantial revenue growth at accretive margins across the board; (2) additional premier end and direct customers in very high-capacity demand growth markets; and (3) with associated state-of-the-art advancements in critical technology platforms. We are and remain active and committed to creating sustainable value for all our stakeholders.”

Ellwanger further commented: “During this challenging time in Israel we have not missed a single customer commit, with strong activities in place to continue seamless operations. Thank you to all our employees worldwide.”

Third Quarter of 2023 Results Overview

Revenue for the third quarter of 2023 was $358 million as compared with $357 million for the second quarter of 2023. Revenue for the third quarter of 2022 was $427 million.

Gross profit for the third quarter of 2023 was $87 million as compared with $87 million for the second quarter of 2023. Gross profit for the third quarter of 2022 was $125 million.

As announced, Tower and Intel have mutually agreed to terminate the merger agreement entered in February 2022. The merger termination fee was paid by Intel to Tower during the third quarter of 2023 and is presented in a separate line in the statement of operations for the third quarter of 2023, net of associated cost, in the amount of $314 million. The impact of this fee on net profit for the third quarter of 2023 is $290 million, net of taxes.

O perating profit for the third quarter of 2023 was $362 million and included $314 million, net, from the Intel merger contract termination. Operating profit was $51 million in the second quarter of 2023 and $79 million in the third quarter of 2022.

Net profit for the third quarter of 2023 was $342 million, or $3.10 basic and $3.07 diluted earnings per share, and included $290 million, net due to the payment by Intel of merger contract termination fees. Net profit for the second quarter of 2023 was $51 million, or $0.46 basic and diluted earnings per share. Net profit in the third quarter of 2022 was $69 million, or $0.63 basic and $0.62 diluted earnings per share.

Cash flow generated from operating activities in the third quarter of 2023 was $402 million and included net cash proceeds received from Intel following the merger contract termination, as compared with $75 million in the second quarter of 2023. Investments in equipment and other fixed assets were $101 million, net, for the third quarter of 2023 as compared with $89 million in the second quarter of 2023. 

Business Outlook
Tower Semiconductor guides revenue for the fourth quarter of 2023 to be $350 million, with an upward or downward range of 5%.

Teleconference and Webcast
Tower Semiconductor will host an investor conference call today, Monday, November 13, 2023, at 10:00 a.m. Eastern time (9:00 a.m. Central time, 8:00 a.m. Mountain time, 7:00 a.m. Pacific time and 5:00 p.m. Israel time) to discuss the company’s financial results for the third quarter of 2023 and its outlook.

This call will be webcast and can be accessed via Tower Semiconductor’s website at www.towersemi.com or by calling 1-888-642-5032 (U.S. Toll-Free), 03-918-0610 (Israel), +972-3-918-0610 (International). For those who are not available to listen to the live broadcast, the call will be archived on Tower Semiconductor’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, which may be used and/ or presented in this release and/ or prior earnings related filings and/ or in related public disclosures or filings with respect to the financial statements and/ or results of the Company, which we may describe as adjusted financial measures and/ or reconciled financial measures, are 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 the following: (1) amortization of acquired intangible assets as included in our operating costs and expenses, (2) compensation expenses in respect of equity grants to directors, officers, and employees as included in our operating costs and expenses, (3) merger contract termination fees received from Intel, net of associated cost and taxes following the previously announced Intel contract termination as included in net profit, and (4) restructuring income, net, which includes income, net of cost and taxes associated with the cessation of operations of the Arai manufacturing factory in Japan which occurred during 2022 as included in net profit. These adjusted financial measures should be evaluated in conjunction with, and are not a substitute for, GAAP financial measures. The tables may 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 and/ or prior earnings related filings and/ or in related public disclosures or filings with respect to the financial statements and/ or results of the Company, as well as may be included and calculated in the tables herein, the term Earnings Before Interest Tax Depreciation and Amortization which we define as EBITDA consists of operating profit in accordance with GAAP, excluding (i) depreciation expense s, which include depreciation recorded in cost of revenues and in operating cost and expenses lines (e.g., research and development related equipment and/ or fixed other assets depreciation) , (ii) stock-based compensation expense , (iii) amortization of acquired intangible assets , (iv) merger contract termination fees received from Intel, net of associated cost following the previously announced Intel contract termination , as included in operating profit and (v) restructuring income, net in relation to the Arai manufacturing factory in Japan, as included in operating profit . EBITDA is reconciled in the tables below and/or in prior earnings- related filings and/ or in related public disclosures or filings with respect to the financial statements and/ or results of the Company from GAAP operating profit. EBITDA and the adjusted financial information presented herein and/ or prior earnings-related filings and/ or in related public disclosures or filings with respect to the financial statements and/ or results of the Company, are 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 and/ or prior earnings- related filings and/ or in related public disclosures or filings with respect to the financial statements and/ or results of the Company, 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 Net Cash, as may be used and/ or presented in this release and/ or prior earnings-related filings and/ or in related public disclosures or filings with respect to the financial statements and/ or results of the Company, is comprised of cash, cash equivalents, short-term deposits and marketable securities less debt amounts as presented in the balance sheets included herein. The term Net Cash 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 cash, debt, 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 and/ or prior earnings related filings and/ or in related public disclosures or filings with respect to the financial statements and/ or results of the Company, is calculated to be net cash provided by operating activities (in the amounts of $ 402 million, $ 75 million and $ 122 million for the three months periods ended September 30, 2023, June 30 , 2023 and September 30, 2022 , respectively ( less cash used for investments in property and equip ment, net (in the amounts of $ 101 million, $ 89 million and $ 45 million for the three months periods ended September 30, 2023, June 30 , 2023 and September 30, 2022 , 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 .