PR Newswire | Jul 31, 2020 02:01AM EDT

Results for the Second Quarter of 2020

07/31 01:00 CDT

ASE Technology Holding Co., Ltd. Reports Unaudited Consolidated Financial Results for the Second Quarter of 2020 TAIPEI, Taiwan, R.O.C., July 31, 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 isthe 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, breakthroughinnovations, 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:

ir@aseglobal.comTel: +886.2.6636.5678 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 Mar. 31 Jun. 30 Jun. 30 Jun. 30 2020 2020 2019 2020 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 (4,837) (4,609) (4,515) (9,446) (8,470) development

Selling, general and (5,545) (5,484) (5,311) (11,029) (10,448) administrative

Total operating (10,382) (10,093) (9,826) (20,475) (18,918) expenses

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 718 (324) (340) 394 (520) (loss)

Gain (loss) on valuation of financial assets (17) 186 802 169 2,358 and liabilities

Gain (loss) on equity-method 105 (39) 114 66 (40) investments

Others 417 244 614 661 700

Total non-operating 452 (826) 281 (374) 623 income (expenses)

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 7,233 4,062 2,800 11,295 5,030 noncontrolling interest

Noncontrolling (296) (163) (110) (459) (297) interest



Net income attributable to shareholders of the 6,937 3,899 2,690 10,836 4,733 parent



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 4,273,7704,280,9904,256,7994,279,0724,256,265calculation (in thousands)



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 Mar. 31 Jun. 30 Jun. 30 Jun. 30 2020 2020 2019 2020 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 (4,081) (4,114) (4,020) (8,195) (7,861) administrative

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 Mar. 31 Jun. 30 Jun. 30 Jun. 30 2020 2020 2019 2020 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 (1,403) (1,294) (1,248) (2,697) (2,500) administrative

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, As of Mar. 31, 2020 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 12,950 14,750 method

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 11,366 13,725 long-term borrowings[3]

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 OperatingActivities:

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 (1,659) (4,476) (5,438) (6,135) (4,630)items

Net cash generated from 20,005 13,448 11,623 33,453 27,641 operating activities

Cash Flows from InvestingActivities:

Net payments for property, (16,587) (13,605) (11,451) (30,192) (20,329) plant and equipment

Other investment activities 1,902 (205) (774) 1,697 1,976 items

Net cash used in investing (14,685) (13,810) (12,225) (28,495) (18,353) activities

Cash Flows from Financing Activities:

Total net proceeds from (18,900) 13,890 (2,521) (5,010) (5,693) (repayment of) borrowings

Other financing activities (457) 194 (896) (263) (1,048)items

Net cash generated from(used (19,357) 14,084 (3,417) (5,273) (6,741) in) financing activities

Foreign currency exchange (1,569) (24) (208) (1,593) 1,025 effect

Net increase (decrease) incash (15,606) 13,698 (4,227) (1,908) 3,572 and cash equivalents

Cash and cash equivalents atthe 73,829 60,131 59,317 60,131 51,518 beginning of period

Cash and cash equivalents atthe 58,223 73,829 55,090 58,223 55,090 end of period

[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 notespayable.

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

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SOURCE ASE Technology Holding Co., Ltd.