ASE Technology Holding Co., Ltd. : Reports Unaudited Consolidated Financial Results for the Second Quarter of 2020

TAIPEI, Taiwan, R.O.C., July 31, 2020 /PRNewswire/ -- ASE Technology Holding Co., Ltd. (TAIEX: 3711, NYSE: ASX) ("We", "ASEH", or the "Company"), the leading provider of semiconductor manufacturing services in assembly and test, today reported unaudited net revenues[1] of NT$107,549 million for 2Q20, up by 19% year-over-year and up by 11% sequentially. Net income attributable to shareholders of the parent for the quarter totaled NT$6,937 million, up from a net income attributable to shareholders of the parent of NT$2,690 million in 2Q19 and up from a net income attributable to shareholders of the parent of NT$3,899 million in 1Q20. Basic earnings per share for the quarter were NT$1.63 (or US$0.109 per ADS), compared to basic earnings per share of NT$0.63 for 2Q19 and basic earnings per share of NT$0.92 for 1Q20. Diluted earnings per share for the quarter were NT$1.60 (or US$0.107 per ADS), compared to diluted earnings per share of NT$0.62 for 2Q19 and diluted earnings per share of NT$0.89 for 1Q20.

RESULTS OF OPERATIONS

2Q20 Results Highlights – Consolidated

• Net revenue contribution from packaging operations, testing operations, EMS operations and others, each represented approximately 50%, 12%, 37% and 1%, respectively, of total net revenues for the quarter.
• Cost of revenue was NT$88,740 million for the quarter, up from NT$81,201 million in 1Q20.
• Raw material cost totaled NT$50,216 million for the quarter, representing 47% of total net revenues.
• Labor cost totaled NT$13,477 million for the quarter, representing 13% of total net revenues.
• Depreciation, amortization and rental expenses totaled NT$11,699 million for the quarter.
• Gross margin increased 0.9 percentage points to 17.5% in 2Q20 from 16.6% in 1Q20.
• Operating margin was 7.8% in 2Q20, compared to 6.2% in 1Q20.
• In terms of non-operating items:
• Net interest expense was NT$771 million.
• Net foreign exchange gain of NT$718 million was primarily attributable to the depreciation of U.S. dollar against New Taiwan dollar.
• Loss on valuation of financial assets and liabilities was NT$17 million.
• Net gain on equity-method investments was NT$105 million.
• Other net non-operating income of NT$417 million were primarily attributable to miscellaneous incomes. Total non-operating income for the quarter were NT$452 million.
• Income before tax was NT$8,879 million for 2Q20, compared to NT$5,237 million in 1Q20.  We recorded income tax expenses of NT$1,646 million for the quarter, compared to NT$1,175 million in 1Q20.
• In 2Q20, net income attributable to shareholders of the parent was NT$6,937 million, compared to net income attributable to shareholders of the parent of NT$2,690 million in 2Q19 and net income attributable to shareholders of the parent of NT$3,899 million in 1Q20.
• lOur total number of shares outstanding at the end of the quarter was 4,338,345,132, including treasury stock owned by our subsidiaries. Our 2Q20 basic earnings per share of NT$1.63 (or US$0.109 per ADS) were based on 4,265,407,583 weighted average numbers of shares outstanding in 2Q20. Our 2Q20 diluted earnings per share of NT$1.60 (or US$0.107 per ADS) were based on 4,273,769,436 weighted average number of shares outstanding in 2Q20.

2Q20 Results Highlights – ATM[2]

• Cost of revenues was NT$54,434 million for the quarter, up by 3% sequentially.
• Raw material cost totaled NT$19,026 million for the quarter, representing 27% of total net revenues.
• Labor cost totaled NT$12,045 million for the quarter, representing 17% of total net revenues.
• Depreciation, amortization and rental expenses totaled NT$11,080 million for the quarter.
• Gross margin increased 1.6 percentage points to 21.7% in 2Q20 from 20.1% in 1Q20.
• Operating margin was 10.4% in 2Q20, compared to 8.4% in 1Q20.

2Q20 Results Highlights – EMS

• Cost of revenues for the quarter was NT$35,979 million, up by 21% sequentially.
• Raw material cost totaled NT$31,081 million for the quarter, representing 78% of total net revenues.
• Labor cost totaled NT$1,358 million for the quarter, representing 3% of total net revenues.
• Depreciation, amortization and rental expenses totaled NT$487 million for the quarter.
• Gross margin increased 0.1 percentage points to 9.4% in 2Q20 from 9.3% in 1Q20.
• Operating margin increased to 3.1% in 2Q20 from 2.4% in 1Q20.

LIQUIdiTY AND CAPITAL RESOURCES

• Capital expenditures in 2Q20 totaled US$495 million, of which US$287 million were used in packaging operations, US$133 million in testing operations, US$70 million in EMS operations and US$5 million in interconnect materials operations and others.
• As of June 30, 2020, total unused credit lines amounted to NT$253,777 million.
• Current ratio was 1.17 and net debt to equity ratio was 0.70 as of June 30, 2020.
• Total number of employees was 95,448 as of June 30, 2020, compared to 96,296 as of March 31, 2020.

Business Review

Customers

ATM consolidated Basis

• Our five largest customers together accounted for approximately 50% of our total net revenues in 2Q20, compared to 49% in 1Q20. Two customers each accounted for more than 10% of our total net revenues in 2Q20 individually.
• Our top 10 customers both contributed 61% of our total net revenues in 2Q20 and 1Q20.
• Our customers that are integrated device manufacturers or IDMs both accounted for 29% of our total net revenues in 2Q20 and 1Q20. 

EMS Basis

• Our five largest customers together accounted for approximately 78% of our total net revenues in 1Q20, compared to 76% in 1Q20.  One customer accounted for more than 10% of our total net revenues in 2Q20.
• Our top 10 customers contributed 89% of our total net revenues in 2Q20, compared to 88% in 1Q20.

About ASE Technology Holding Co., Ltd.

ASEH is the leading provider of semiconductor manufacturing services in assembly and test.  The Company develops and offers complete turnkey solutions covering front-end engineering test, wafer probing and final test, as well as IC packaging, materials and electronic manufacturing services through USI with superior technologies, breakthrough innovations, and advanced development programs.  With advanced technological capabilities and a global presence spanning Taiwan, China, South Korea, Japan, Singapore, Malaysia and Mexico as well as the United States and Europe, ASEH has established a reputation for reliable,  high quality products and services. For moreinformation, please visit our website at http://www.aseglobal.com.

Investor Relations Contact:

[e-mail]
Tel: [phone]
http://www.aseglobal.com

Safe Harbor Notice

This press release contains "forward-looking statements" within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. Although these forward-looking statements, which may include statements regarding our future results of operations, financial condition or business prospects, are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on these forward-looking statements, which apply only as of the date of this press release. The words "anticipate," "believe," "estimate," "expect," "intend," "plan" and similar expressions, as they relate to us, are intended to identify these forward-looking statements in this press release. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and our actual results of operations, financial condition or business prospects may differ materially from those expressed or implied by the forward-looking statements for reasons including, among others, risks associated with cyclicality and market conditions in the semiconductor or electronic industry; changes in our regulatory environment, including our ability to comply with new or stricter environmental regulations and to resolve environmental liabilities; demand for the outsourced semiconductor packaging, testing and electronic manufacturing services we offer and for such outsourced services generally; the highly competitive semiconductor or manufacturing industry we are involved in; our ability to introduce new technologies in order to remain competitive; international business activities; our business strategy; our future expansion plans and capital expenditures; the strained relationship between the Republic of China and the People's Republic of China; general economic and political conditions; the recent shift in United States trade policies; possible disruptions in commercial activities caused by natural or human-induced disasters; fluctuations in foreign currency exchange rates; and other factors.  For a discussion of these risks and other factors, please see the documents we file from time to time with the Securities and Exchange Commission, including the 2019 Annual Report on Form 20-F filed on March 31, 2020.

Supplemental Financial Information

Consolidated Operations
	2Q/20	1Q/20	2Q/19
EBITDA (NT$ Millions)	22,488	19,061	18,072
ATM Consolidated Operations
	2Q/20	1Q/20	2Q/19
Net Revenues (NT$ Millions)	69,516	66,209	59,594
Revenues by Application
Communication	54%	54%	51%
Computer	14%	15%	14%
Automotive, Consumer & Others	32%	31%	35%
Revenues by Type
Bumping, Flip Chip, WLP & SiP	38%	38%	34%
Wirebonding	35%	36%	39%
Discrete and Others	7%	7%	8%
Testing	18%	17%	17%
Material	2%	2%	2%
Capacity & EBITDA
CapEx (US$ Millions)*	424	394	423
EBITDA (NT$ Millions)	20,037	17,693	16,512
Number of Wirebonders	24,667	24,780	25,059
Number of Testers	5,790	5,554	5,003
EMS Operations
	2Q/20	1Q/20	2Q/19
Net Revenues (NT$ Millions)	39,709	32,727	31,533
Revenues by End Application
Communication	46%	36%	40%
Computer & Storage	12%	14%	14%
Consumer	28%	33%	24%
Industrial	10%	11%	15%
Automotive	3%	6%	6%
Others	1%	0%	1%
Capacity
CapEx (US$ Millions)*	70	15	21
* Capital expenditure excludes building construction costs.

 

ASE Technology Holding Co., Ltd.
Summary of Consolidated Statement of Comprehensive Income Data
(In NT$ millions, except per share data)
(Unaudited)
	For the three months ended						For the six months ended
	Jun. 30 2020		Mar. 31 2020		Jun. 30 2019		Jun. 30 2020		Jun. 30 2019
Net revenues:
Packaging	53,622		51,613		47,602		105,235		91,459
Testing	12,690		11,563		10,285		24,253		19,236
EMS	39,703		32,721		31,524		72,424		66,471
Others	1,534		1,460		1,330		2,994		2,436
Total net revenues	107,549		97,357		90,741		204,906		179,602
Cost of revenues	(88,740)		(81,201)		(76,772)		(169,941)		(154,248)
Gross profit	18,809		16,156		13,969		34,965		25,354
Operating expenses:
Research and development	(4,837)		(4,609)		(4,515)		(9,446)		(8,470)
Selling, general and administrative	(5,545)		(5,484)		(5,311)		(11,029)		(10,448)
Total operating expenses	(10,382)		(10,093)		(9,826)		(20,475)		(18,918)
Operating income	8,427		6,063		4,143		14,490		6,436
Net non-operating (expenses) income:
Interest expense - net	(771)		(893)		(909)		(1,664)		(1,875)
Foreign exchange gain (loss)	718		(324)		(340)		394		(520)
Gain (loss) on valuation of financial assets   and liabilities	(17)		186		802		169		2,358
Gain (loss) on equity-method investments	105		(39)		114		66		(40)
Others	417		244		614		661		700
Total non-operating income (expenses)	452		(826)		281		(374)		623
Income before tax	8,879		5,237		4,424		14,116		7,059
Income tax expense	(1,646)		(1,175)		(1,624)		(2,821)		(2,029)
Income from continuing operations and   before noncontrolling interest	7,233		4,062		2,800		11,295		5,030
Noncontrolling interest	(296)		(163)		(110)		(459)		(297)
Net income attributable to   shareholders of the parent	6,937		3,899		2,690		10,836		4,733
Per share data:
Earnings (losses) per share
– Basic	NT$1.63		NT$0.92		NT$0.63		NT$2.54		NT$1.11
– Diluted	NT$1.60		NT$0.89		NT$0.62		NT$2.49		NT$1.08
Earnings (losses) per equivalent ADS
– Basic	US$0.109		US$0.061		US$0.041		US$0.170		US$0.072
– Diluted	US$0.107		US$0.060		US$0.040		US$0.166		US$0.070
Number of weighted average shares used in   diluted EPS calculation (in thousands)	4,273,770		4,280,990		4,256,799		4,279,072		4,256,265
FX (NTD/USD)	29.94		30.01		31.04		29.97		30.90

 

ASE Technology Holding Co., Ltd.
Summary of Consolidated Statement of Comprehensive Income Data – ATM
(In NT$ millions, except per share data)
(Unaudited)
	For the three months ended						For the six months ended
	Jun. 30 2020		Mar. 31 2020		Jun. 30 2019		Jun. 30 2020		Jun. 30 2019
Net revenues:
Packaging	55,732		53,600		48,329		109,332		92,817
Testing	12,693		11,566		10,286		24,259		19,237
Direct Material	1,051		1,014		944		2,065		1,844
Others	40		29		35		69		67
Total net revenues	69,516		66,209		59,594		135,725		113,965
Cost of revenues	(54,434)		(52,875)		(48,494)		(107,309)		(94,427)
Gross profit	15,082		13,334		11,100		28,416		19,538
Operating expenses:
Research and development	(3,777)		(3,648)		(3,414)		(7,425)		(6,457)
Selling, general and administrative	(4,081)		(4,114)		(4,020)		(8,195)		(7,861)
Total operating expenses	(7,858)		(7,762)		(7,434)		(15,620)		(14,318)
Operating income	7,224		5,572		3,666		12,796		5,220

 

ASE Technology Holding Co., Ltd.
Summary of Consolidated Statement of Comprehensive Income Data – EMS
(In NT$ millions, except per share data)
(Unaudited)
	For the three months ended						For the six months ended
	Jun. 30 2020		Mar. 31 2020		Jun. 30 2019		Jun. 30 2020		Jun. 30 2019
Net revenues:
Total net revenues	39,709		32,727		31,533		72,436		66,492
Cost of revenues	(35,979)		(29,679)		(28,657)		(65,658)		(60,686)
Gross profit	3,730		3,048		2,876		6,778		5,806
Operating expenses:
Research and development	(1,085)		(983)		(1,125)		(2,068)		(2,065)
Selling, general and administrative	(1,403)		(1,294)		(1,248)		(2,697)		(2,500)
Total operating expenses	(2,488)		(2,277)		(2,373)		(4,765)		(4,565)
Operating income	1,242		771		503		2,013		1,241

 

ASE Technology Holding Co., Ltd.
Summary of Consolidated Balance Sheet Data
(In NT$ millions)
(Unaudited)
	As of Jun. 30, 2020						As of Mar. 31, 2020
Current assets:
Cash and cash equivalents			58,223				73,829
Financial assets – current			5,483				5,611
Notes and accounts receivable			73,763				73,573
Inventories			50,649				50,027
Others			14,395				13,575
Total current assets			202,513				216,615
Financial assets – non-current & Investments – equity   method			12,950				14,750
Property plant and equipment			238,757				234,419
Right-of-use assets			9,091				9,578
Intangible assets			77,154				77,941
Others			18,127				18,365
Total assets			558,592				571,668
Current liabilities:
Short-term borrowings			42,312				51,620
Current portion of bonds payable & Current portion of    long-term borrowings[3]			11,366				13,725
Notes and accounts payable			54,400				53,944
Others			64,547				53,719
Total current liabilities			172,625				173,008
Bonds payable			39,263				29,276
Long-term borrowings[4]			115,518				134,363
Other liabilities			17,251				17,555
Total liabilities			344,657				354,202
Shareholders of the parent			200,409				203,624
Non-controlling interests			13,526				13,842
Total liabilities & shareholders' equity			558,592				571,668
Current Ratio			1.17				1.25
Net Debt to Equity Ratio			0.70				0.71

     

ASE Technology Holding Co., Ltd.
Summary of Consolidated Cash Flow Statements
(In NT$ millions)
(Unaudited)
		For the three months ended						For the six months ended
		Jun. 30		Mar. 31		Jun. 30		Jun. 30		Jun. 30
		2020		2020		2019		2020		2019
Cash Flows from Operating Activities:
Profit before income tax		8,879		5,237		4,424		14,116		7,059
Depreciation & amortization		12,785		12,687		12,637		25,472		25,212
Other operating activities items		(1,659)		(4,476)		(5,438)		(6,135)		(4,630)
Net cash generated from    operating activities		20,005		13,448		11,623		33,453		27,641
Cash Flows from Investing Activities:
Net payments for property,    plant and equipment		(16,587)		(13,605)		(11,451)		(30,192)		(20,329)
Other investment activities    items		1,902		(205)		(774)		1,697		1,976
Net cash used in investing    activities		(14,685)		(13,810)		(12,225)		(28,495)		(18,353)
Cash Flows from Financing    Activities:
Total net proceeds from    (repayment of) borrowings		(18,900)		13,890		(2,521)		(5,010)		(5,693)
Other financing activities items		(457)		194		(896)		(263)		(1,048)
Net cash generated from (used    in) financing activities		(19,357)		14,084		(3,417)		(5,273)		(6,741)
Foreign currency exchange    effect		(1,569)		(24)		(208)		(1,593)		1,025
Net increase (decrease) in cash    and cash equivalents		(15,606)		13,698		(4,227)		(1,908)		3,572
Cash and cash equivalents at the    beginning of period		73,829		60,131		59,317		60,131		51,518
Cash and cash equivalents at the    end of period		58,223		73,829		55,090		58,223		55,090

 

 

[1] All financial information presented in this press release is unaudited, consolidated and prepared in accordance with Taiwan-IFRS (International Financial Reporting Standards as endorsed for use in the R.O.C.).  Such financial information is generated internally by us and has not been subjected to the same review and scrutiny, including internal auditing procedures and audit by our independent auditors, to which we subject our audited consolidated financial statements, and may vary materially from the audited consolidated financial information for the same period.  Any evaluation of the financial information presented in this press release should also take into account our published audited consolidated financial statements and the notes to those statements.  In addition, the financial information presented is not necessarily indicative of our results of operations for any future period.

[2] ATM stands for Semiconductor Assembly, Testing and Material.

[3] Current portion of long-term borrowings include long-term loans and notes payable.

[4] Long-term borrowings include long-term loans and bills payable.

 

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SOURCE ASE Technology Holding Co., Ltd.