TowerJazz Targets $200 Million Quarterly Revenue Run
Rate
Ken Nagy, CFA
On February 16, 2012,
Tower Semiconductor Ltd. (
TSEM
)
, the Israel based global specialty foundry leader, reported
financial results for its fiscal 2011 fourth quarter and full year,
ended December 31, 2011.
The Company reported fourth quarter revenues of $174.584 million,
up 29% year over year but down $1.528 million sequentially from
$176.112 million for the three months ended September 30, 2011.
Still, Tower reported a fourth quarter 2011 GAAP net loss of
$16.701 million, down year over year from a profit of $1.296
million for the fourth quarter 2010 and from a profit of
$1.839 million during the third quarter of 2011.
The year over year decrease from net income to a net loss was
primarily due to lower margins.
The sequential drop from a profit to a net loss was due to $11.962
million of financing expense, net charged in the fourth quarter of
2011 and a $14.020 million in other income, net received in the
third quarter.
Year over year, gross margin dropped sharply from 24.7 percent to
10.1 percent for the three months ended December 31, 2011.
Still, gross margin for the fourth quarter increased slightly from
9.3 percent for the three months ended September 30, 2011.
Based on a weighted average number of ordinary shares outstanding
of 318.255 million, GAAP basic net loss per share resulted in a net
loss of $0.05 per share during the fourth quarter of fiscal
2011. This compared to basic net income per ordinary share of
$0.01 on a weighted average number of ordinary shares of 317.106
million during the three months ended September 30, 2011.
Non-GAAP fourth quarter 2011 gross profit was $57.742 million
representing gross margin of 33.1 percent while net profit was
$33.907 million.
For the fiscal year ended December 31, 2011, year over year
revenues improved by 20 percent or $101.761 million to a record
$611.023 million from $509.262 million for fiscal 2010.
The year over year revenue improvement was fueled by a long term
business relationship with a new customer, Micron Technologies and
the progress was a multiple times above the Company's peer group's
growth.
GAAP Net loss for the twelve months improved by $23.837 million
year over year to a net loss of $18.530 million for the fiscal year
ended December 31, 2011. This compares to a net loss of $42.367
million for the full year fiscal 2010.
As well, gross margin for the full year decreased to 13.9 percent
compared to gross margin of 21.1 percent for the fiscal year ended
December 31, 2010.
Based on a weighted average number of ordinary shares outstanding
of 302.065 million, GAAP basic net loss per share resulted in a net
loss of $0.06 per ordinary share during the twelve months ended
December 31, 2011. This compared to a basic net loss per
ordinary share of $0.18 on a weighted average number of ordinary
common shares of 235.320 million during the twelve months ended
December 31, 2010.
On a non-GAAP basis, net income for the fiscal year ended December
31, 2011 increased year over year by 12.9 percent to $156.061
million while non-GAAP earnings per basic share for fiscal 2011
dropped to $0.52 per basic share compared to $0.59 per basic share
for the twelve months ended December 31, 2010.
Tower Semiconductor's balance sheet stayed strong with $101.149
million in cash, short-term deposits and designated deposits and
working capital of $35.830 million for the period ended December
31, 2011.
Similarly, the Company reduced debt from $482 million as of
December 31, 2010 to $350 million as of the end of 2011 and
improved shareholders' equity to $175 million from $118 million as
of the end of 2010.
It should be noted that during 2011, the Company won a new tier one
customer in 2011 as well as achieved record revenues which firmly
cemented Tower as the number one specialty foundry provider and
expanded its revenue lead over the number two foundry leader by
about $100 million.
Additionally, Tower Semiconductor was able to double its wafer
capacity as compared to 2010.
The Company was able to increase its total manufacturing capacity
from 850,000 wafers per year at the end of 2010 to a new capacity
level of 1.7 million wafers per year in 2011.
This was achieved by its CAPEX expansions and to a greater degree
by its cost effective acquisition of the 70,000 wafer per month
factory in Nishiwaki Japan for $140 million in June 2011.
The newly and substantially increased capacity and technical
capability should enable Tower to convert a continued strong design
win momentum into products while bringing customers into volume
production at a faster rate that was possible only a half year ago.
Similarly, the newly announced signed India MOU offers Tower a low
cost entrance into an emerging market at the 300mm wafer size, 90nm
analog technology and companion chips in deep submicron
technologies (65-45nm), should the government accept this proposal.
On top of all this, management announced guidance for its fiscal
2012 first quarter.
Management anticipates fiscal 2012 first quarter revenues to be in
the range of $165 million to $175 million.
The guidance would represent nearly a 41 percent year over year
growth in revenues at the midpoint of the projected range for the
quarter.
Furthermore, the Company continues to target a $200 million
quarterly revenue run rate by year end and believes it will
continue to outperform.
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