Shareholders' equity as of June 30, 2014 was $191 million as compared to $141 million as of December 31, 2013.
Outlook
TowerJazz expects revenues for its 2014 third quarter ending September 30, 2014 to be $225 million with an upward or downward range of 5%. Mid-range guidance represents 70% year over year growth. The third quarter of 2014 will be the first quarter to realize no revenue from Micron, hence the mid-range guidance represents a year over year revenue growth of 20% for all customers (excluding Micron and Panasonic) and 13% quarter over quarter growth.
During the quarter, the Company received and is now evaluating offers and opportunities to strengthen its balance sheet by exchanging its existing debt with longer term, non-equity debt vehicles.
Management Remarks
Russell Ellwanger, Chief Executive Officer of TowerJazz, commented, “The second quarter was our first integrating TPSCo activities and consolidating the revenues. There were no operational surprises against our plans and better than expected business activities. We closed negotiations with 3rd party customers, including high end CIS and top-tier IDM transfers, which should reach annual revenues of well beyond $100 million within the next 3 years. We expect these first contracts and agreements to begin volume production ramp in the second half of 2015.
“The core TowerJazz business grew significantly at 50% and 40%, for our top 5 and top 10 customers, respectively, when comparing their revenues in the second quarter of 2014 to the same period of last year. For these top customers, we expect continuous growth throughout the year, with already 11% and 20%, respectively, comparing the second quarter revenues to the first quarter of 2014.
“Second quarter saw a record number of masks full sets entering our Israeli and US fabs of over 240 vs. 130 for the same period of 2013. The first half of 2014 increase in new masks of 62% vs. the first half of 2013 is a definite indication that we are providing customers’ satisfaction in growing market segments, enabling continued significant growth in 2015 and 2016, as these products reach peak volume production.
“We are seeing strong market demand from customers being served by all of our business units, which we are well poised to serve both organically and with the newly added operational and technical capabilities of TPSCo, enabling us to exceed our $1 billion annual revenue target.”
Teleconference and Webcast
TowerJazz will host an investor conference call today, August 4, 2014, 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 2014 second quarter and its third quarter 2014 outlook.
This call will be webcast and can be accessed via TowerJazz’s website at www.towerjazz.com, or by calling: 1-888-668-9141 (U.S. Toll-Free), 03-918-0609 (Israel), +972-3-918-0609 (International). For those who are not available to listen to the live broadcast, the call will be archived for 90 days.
As previously announced, beginning with the second quarter of 2007,
the Company has been presenting its financial statements in accordance
with U.S. GAAP. This release, including the financial tables
below, presents other financial information that may be considered
"non-GAAP financial measures" under Regulation G and related reporting
requirements promulgated by the Securities and Exchange Commission as
they apply to our company. These non-GAAP financial measures exclude (1)
depreciation and amortization, (2) compensation expenses in respect of
options granted to directors, officers and employees, (3) Nishiwaki Fab
restructuring costs and impairments, (4) amortization related to a lease
agreement early termination, (5) TPSCo pre-merger costs, (6) financing
expenses, net other than interest accrued, such that non-GAAP interest
expenses and other financial expenses, net include only interest accrued
during the reported period, whether paid or payable, (7) Gain from
acquisition and (8) income tax expense, such that non-GAAP income tax
expense include only taxes paid during the reported period. Non-GAAP
financial measures should be evaluated in conjunction with, and are not
a substitute for, GAAP financial measures. The tables also present the
GAAP financial measures, which are most comparable to the non-GAAP
financial measures as well as reconciliation between the non-GAAP
financial measures and the most comparable GAAP financial measures. As
applied in this release, the term Earnings Before Interest Tax
Depreciation and Amortization (EBITDA) consists of loss, according to
U.S. GAAP, excluding amortization related to a lease agreement early
termination, Nishiwaki Fab restructuring costs and impairment, TPSCo
pre-merger costs, gain from acquisition, interest and financing
expenses (net), tax, depreciation and amortization and stock based
compensation expenses. EBITDA is not a required GAAP financial measure
and may not be comparable to a similarly titled measure employed by
other companies. EBITDA and the non-GAAP financial information
presented herein should not be considered in isolation or as a
substitute for operating income, net income or loss, cash flows provided
by operating, investing and financing activities, per share data or
other income or cash flow statement data prepared in accordance with
GAAP and is not necessarily consistent with the non-GAAP data presented
in previous filings.
