SunEdison Semiconductor Limited (NASDAQ:SEMI) ("SunEdison
Semiconductor" or the “Company”) today reported financial results
for the second quarter ended June 30, 2016.
Second Quarter 2016
Summary:
- Revenue grew sequentially due to increased volumes and stable
pricing
- Gross profit up sequentially
- Received final installment of a customer deposit, the first
portion of which was received during the 2016 first quarter
Results Review
Net sales for the 2016 second quarter were
$190.9 million, up 4.7% sequentially compared to $182.3 million in
the prior quarter. The sequential increase was primarily
driven by higher unit volume and stable pricing. Gross profit
for the 2016 second quarter was $17.5 million, or 9.2% of net
sales, compared to $15.0 million, or 8.2% of net sales in the prior
quarter.
“I am pleased with our second quarter
performance. We grew our revenue and gross profits
sequentially. Wafer demand improved quarter-on-quarter across
all diameters, and this together with stable average pricing had a
positive impact on our revenue,” said Shaker Sadasivam, President
and CEO. “Although there is nothing material to report at
this time on our ongoing review of strategic alternatives, those
efforts are continuing while we remain focused on delivering high
quality products and service for our customers.”
Second quarter 2016 operating loss was $25.9
million, compared to an operating loss of $12.8 million in the 2016
first quarter. Second quarter 2016 operating loss included a
$14.7 million long-lived asset impairment charge related to the
previous sale of our polysilicon and chlorosilanes plant in Merano,
Italy, and a $1.1 million charge related to previously announced
restructuring activities. First quarter 2016 operating loss
included a $1.5 million charge related to previously announced
restructuring activities.
Second quarter 2016 operating cash flow was
$11.1 million compared to $11.0 million in the prior quarter.
Second quarter 2016 cash from financing activities was $1.2
million, and cash used in investing activities of $13.0 million
included $16.9 million of capital spending. Funds remaining
on deposit from a customer were $20.1 million. The Company
ended the quarter with cash and cash equivalents of $79.2 million,
excluding the customer deposit.
Second quarter 2016 Adjusted EBITDA was $20.3
million, or 10.6% of sales, down $0.2 million compared to $20.5
million, or 11.2% of sales for the prior quarter. Second
quarter 2016 and first quarter 2016 Adjusted EBITDA included
foreign exchange losses of $2.9 million and $1.0 million,
respectively, associated with the re-measurement of intra-company
balances and derivative foreign currency forward contracts.
Please see the reconciliation of Adjusted EBITDA to GAAP financial
measures and a description of Adjusted EBITDA in the attached
financial tables.
Conference Call
SunEdison Semiconductor will host a conference
call tomorrow, August 4, 2016, at 9:00 a.m. ET to discuss the
Company’s second quarter 2016 results and related business matters.
A live webcast will be available on the Company’s web site at
www.sunedisonsemi.com. Interested investors should go to the
Company's web site at least fifteen minutes prior to the call to
register and download any necessary audio software.
A replay of the conference call will be
available from 10:30 a.m. ET on August 4, 2016, until 11:59 p.m. ET
on August 18, 2016. To access the replay, please dial (320)
365-3844 at any time during that period, using passcode 397511.
An audio replay will also be available on the Company’s web
site.
About SunEdison
Semiconductor
SunEdison Semiconductor is a global leader in
the manufacture and sale of silicon wafers to the semiconductor
industry. For over 55 years, SunEdison Semiconductor has been
a pioneer in the design and development of silicon wafer
technologies. With R&D and manufacturing facilities in the
U.S., Europe, and Asia, SunEdison Semiconductor enables the next
generation of high performance semiconductor devices. SunEdison
Semiconductor’s common stock is listed on the NASDAQ OMX Global
Select Market under the symbol "SEMI". For more information
about SunEdison Semiconductor, please visit
www.sunedisonsemi.com.
SUNEDISON
SEMICONDUCTOR LIMITED AND SUBSIDIARIES |
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
(In
millions, except per share data) |
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, 2016 |
|
March 31, 2016 |
|
June 30, 2015 |
|
June 30, 2016 |
|
June 30, 2015 |
Net sales to
non-affiliates |
$ |
190.9 |
|
|
$ |
182.3 |
|
|
$ |
207.0 |
|
|
$ |
373.2 |
|
|
$ |
406.0 |
|
Net sales to
affiliates |
— |
|
|
— |
|
|
0.4 |
|
|
— |
|
|
0.8 |
|
Cost of goods sold |
173.4 |
|
|
167.3 |
|
|
183.9 |
|
|
340.7 |
|
|
366.1 |
|
Gross
profit |
17.5 |
|
|
15.0 |
|
|
23.5 |
|
|
32.5 |
|
|
40.7 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Marketing
and administration |
20.9 |
|
|
19.7 |
|
|
21.4 |
|
|
40.6 |
|
|
41.9 |
|
Research and
development |
6.7 |
|
|
6.6 |
|
|
7.3 |
|
|
13.3 |
|
|
15.4 |
|
Restructuring charges (reversals) |
1.1 |
|
|
1.5 |
|
|
(1.4 |
) |
|
2.6 |
|
|
(0.2 |
) |
Long-lived
asset impairment charges |
14.7 |
|
|
— |
|
|
1.2 |
|
|
14.7 |
|
|
1.3 |
|
Operating loss |
(25.9 |
) |
|
(12.8 |
) |
|
(5.0 |
) |
|
(38.7 |
) |
|
(17.7 |
) |
Non-operating expenses
(income): |
|
|
|
|
|
|
|
|
|
Interest
expense |
3.4 |
|
|
4.0 |
|
|
3.6 |
|
|
7.4 |
|
|
7.1 |
|
Interest
income |
(0.1 |
) |
|
(0.1 |
) |
|
(0.1 |
) |
|
(0.2 |
) |
|
(0.2 |
) |
Other,
net |
2.9 |
|
|
6.8 |
|
|
1.2 |
|
|
9.7 |
|
|
(9.2 |
) |
Total non-operating
expenses (income) |
6.2 |
|
|
10.7 |
|
|
4.7 |
|
|
16.9 |
|
|
(2.3 |
) |
Loss before
income tax expense |
(32.1 |
) |
|
(23.5 |
) |
|
(9.7 |
) |
|
(55.6 |
) |
|
(15.4 |
) |
Income tax expense |
5.4 |
|
|
7.4 |
|
|
5.1 |
|
|
12.8 |
|
|
8.4 |
|
Loss
before equity in loss of equity method investments |
(37.5 |
) |
|
(30.9 |
) |
|
(14.8 |
) |
|
(68.4 |
) |
|
(23.8 |
) |
Equity in loss of
equity method investments, net of tax |
(11.0 |
) |
|
(86.2 |
) |
|
(0.7 |
) |
|
(97.2 |
) |
|
(1.0 |
) |
Net loss |
$ |
(48.5 |
) |
|
$ |
(117.1 |
) |
|
$ |
(15.5 |
) |
|
$ |
(165.6 |
) |
|
$ |
(24.8 |
) |
Basic loss per
share |
$ |
(1.15 |
) |
|
$ |
(2.79 |
) |
|
$ |
(0.37 |
) |
|
$ |
(3.94 |
) |
|
$ |
(0.60 |
) |
Diluted loss per
share |
$ |
(1.15 |
) |
|
$ |
(2.79 |
) |
|
$ |
(0.37 |
) |
|
$ |
(3.94 |
) |
|
$ |
(0.60 |
) |
Weighted-average shares
used in computing basic loss per share |
42.0 |
|
|
42.0 |
|
|
41.6 |
|
|
42.0 |
|
|
41.6 |
|
Weighted-average shares
used in computing diluted loss per share |
42.0 |
|
|
42.0 |
|
|
41.6 |
|
|
42.0 |
|
|
41.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUNEDISON
SEMICONDUCTOR LIMITED AND SUBSIDIARIES |
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In
millions) |
|
|
|
|
|
June 30, 2016 |
|
December 31, 2015 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
79.2 |
|
|
$ |
83.5 |
|
Accounts
receivable, net |
94.0 |
|
|
85.8 |
|
Inventories |
114.5 |
|
|
109.3 |
|
Prepaid and
other current assets |
28.2 |
|
|
31.2 |
|
Total
current assets |
315.9 |
|
|
309.8 |
|
Property, plant, and
equipment, net |
528.8 |
|
|
530.8 |
|
Investments |
0.3 |
|
|
121.9 |
|
Other assets |
99.4 |
|
|
86.5 |
|
Total
assets |
$ |
944.4 |
|
|
$ |
1,049.0 |
|
|
|
|
|
Liabilities and
Shareholders' Equity |
|
|
|
Current liabilities: |
|
|
|
Current
portion, long-term debt |
$ |
11.7 |
|
|
$ |
6.7 |
|
Short-term
borrowings |
9.3 |
|
|
6.6 |
|
Accounts
payable |
123.5 |
|
|
116.5 |
|
Deposit for
investment distribution |
— |
|
|
35.0 |
|
Accrued
liabilities |
40.7 |
|
|
46.4 |
|
Accrued
wages and salaries |
24.1 |
|
|
21.1 |
|
Restructuring liabilities |
7.4 |
|
|
9.1 |
|
Total
current liabilities |
216.7 |
|
|
241.4 |
|
Long-term debt, less
current portion |
191.5 |
|
|
191.9 |
|
Pension and
post-employment liabilities |
52.2 |
|
|
51.9 |
|
Restructuring
liabilities |
0.2 |
|
|
3.5 |
|
Refundable customer
deposits |
38.6 |
|
|
— |
|
Other liabilities |
23.5 |
|
|
22.2 |
|
Total
liabilities |
522.7 |
|
|
510.9 |
|
|
|
|
|
Shareholders' equity: |
|
|
|
Ordinary
shares |
964.9 |
|
|
957.2 |
|
Accumulated
deficit |
(381.0 |
) |
|
(215.4 |
) |
Accumulated
other comprehensive loss |
(163.4 |
) |
|
(204.9 |
) |
Total
SunEdison Semiconductor Limited shareholders' equity |
420.5 |
|
|
536.9 |
|
Noncontrolling
interests |
1.2 |
|
|
1.2 |
|
Total
shareholders' equity |
421.7 |
|
|
538.1 |
|
Total
liabilities and shareholders' equity |
$ |
944.4 |
|
|
$ |
1,049.0 |
|
|
|
|
|
|
|
|
|
SUNEDISON
SEMICONDUCTOR LIMITED AND SUBSIDIARIES |
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In
millions) |
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, 2016 |
|
March 31, 2016 |
|
June 30, 2015 |
|
June 30, 2016 |
|
June 30, 2015 |
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(48.5 |
) |
|
$ |
(117.1 |
) |
|
$ |
(15.5 |
) |
|
$ |
(165.6 |
) |
|
$ |
(24.8 |
) |
Adjustments to reconcile net loss
to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
28.5 |
|
|
26.5 |
|
|
27.8 |
|
|
55.0 |
|
|
57.5 |
|
Loss on partial sale of SMP
investment |
— |
|
|
6.1 |
|
|
— |
|
|
6.1 |
|
|
— |
|
Long-lived asset impairment
charges |
14.7 |
|
|
— |
|
|
1.2 |
|
|
14.7 |
|
|
1.3 |
|
Stock-based compensation |
4.1 |
|
|
3.9 |
|
|
3.4 |
|
|
8.0 |
|
|
7.0 |
|
Provision for deferred taxes |
2.5 |
|
|
0.4 |
|
|
0.5 |
|
|
2.9 |
|
|
4.0 |
|
Equity in loss of equity method
investments |
11.0 |
|
|
86.2 |
|
|
0.7 |
|
|
97.2 |
|
|
1.0 |
|
Other |
0.6 |
|
|
1.5 |
|
|
— |
|
|
2.1 |
|
|
(0.5 |
) |
Changes in assets and
liabilities: |
|
|
|
|
|
|
|
|
|
Accounts receivable |
(2.1 |
) |
|
(8.1 |
) |
|
(5.7 |
) |
|
(10.2 |
) |
|
(9.6 |
) |
Inventories |
(2.6 |
) |
|
0.5 |
|
|
9.1 |
|
|
(2.1 |
) |
|
14.8 |
|
Accounts receivable, affiliate |
— |
|
|
— |
|
|
(2.9 |
) |
|
— |
|
|
(8.0 |
) |
Accounts payable, affiliate |
— |
|
|
— |
|
|
(1.0 |
) |
|
— |
|
|
12.4 |
|
Prepaid and other current
assets |
(5.0 |
) |
|
7.2 |
|
|
(1.0 |
) |
|
2.2 |
|
|
(1.4 |
) |
Accounts payable and accrued
liabilities |
9.4 |
|
|
(5.7 |
) |
|
7.0 |
|
|
3.7 |
|
|
14.8 |
|
Income taxes payable |
(5.3 |
) |
|
3.6 |
|
|
(2.7 |
) |
|
(1.7 |
) |
|
0.4 |
|
Pension and post-employment
liabilities |
(0.3 |
) |
|
(0.3 |
) |
|
(0.4 |
) |
|
(0.6 |
) |
|
(0.5 |
) |
Restructuring liabilities |
(0.2 |
) |
|
0.2 |
|
|
(5.7 |
) |
|
— |
|
|
(6.3 |
) |
Other |
4.3 |
|
|
6.1 |
|
|
(1.3 |
) |
|
10.4 |
|
|
(14.0 |
) |
Net cash provided by operating
activities |
11.1 |
|
|
11.0 |
|
|
13.5 |
|
|
22.1 |
|
|
48.1 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Capital expenditures |
(16.9 |
) |
|
(41.0 |
) |
|
(24.1 |
) |
|
(57.9 |
) |
|
(52.9 |
) |
Disbursements made for notes
receivable |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(9.1 |
) |
Other |
3.9 |
|
|
2.5 |
|
|
— |
|
|
6.4 |
|
|
— |
|
Net cash used in investing
activities |
(13.0 |
) |
|
(38.5 |
) |
|
(24.1 |
) |
|
(51.5 |
) |
|
(62.0 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Principal payments on long-term
debt |
(0.4 |
) |
|
(0.4 |
) |
|
(0.5 |
) |
|
(0.8 |
) |
|
(1.0 |
) |
Proceeds from long-term debt |
— |
|
|
4.2 |
|
|
— |
|
|
4.2 |
|
|
— |
|
Change in ordinary shares |
(0.3 |
) |
|
— |
|
|
(0.9 |
) |
|
(0.3 |
) |
|
(0.9 |
) |
Net proceeds on short-term
borrowings |
1.1 |
|
|
1.6 |
|
|
— |
|
|
2.7 |
|
|
7.6 |
|
Advanced payments |
0.9 |
|
|
17.7 |
|
|
— |
|
|
18.6 |
|
|
— |
|
Other |
(0.1 |
) |
|
— |
|
|
(0.1 |
) |
|
(0.1 |
) |
|
— |
|
Net cash provided by (used in)
financing activities |
1.2 |
|
|
23.1 |
|
|
(1.5 |
) |
|
24.3 |
|
|
5.7 |
|
Effect of exchange rate changes on cash and cash
equivalents |
0.2 |
|
|
0.6 |
|
|
0.1 |
|
|
0.8 |
|
|
(1.4 |
) |
Net decrease in cash and cash
equivalents |
(0.5 |
) |
|
(3.8 |
) |
|
(12.0 |
) |
|
(4.3 |
) |
|
(9.6 |
) |
Cash and cash equivalents at beginning of
period |
79.7 |
|
|
83.5 |
|
|
90.6 |
|
|
83.5 |
|
|
88.2 |
|
Cash and cash equivalents at end of period |
$ |
79.2 |
|
|
$ |
79.7 |
|
|
$ |
78.6 |
|
|
$ |
79.2 |
|
|
$ |
78.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUNEDISON
SEMICONDUCTOR LIMITED AND SUBSIDIARIES |
UNAUDITED
SUPPLEMENTAL INFORMATION |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE |
(In
millions) |
|
ADJUSTED EBITDA
CALCULATION [*] |
|
Three Months Ended |
|
Six Months Ended |
|
June 30,
2016 |
|
March 31,
2016 |
|
June 30, 2015 |
|
June 30, 2016 |
|
June 30, 2015 |
Net loss |
$ |
(48.5 |
) |
|
$ |
(117.1 |
) |
|
$ |
(15.5 |
) |
|
$ |
(165.6 |
) |
|
$ |
(24.8 |
) |
Interest, net |
3.3 |
|
|
3.9 |
|
|
3.5 |
|
|
7.2 |
|
|
6.9 |
|
Income tax expense |
5.4 |
|
|
7.4 |
|
|
5.1 |
|
|
12.8 |
|
|
8.4 |
|
Depreciation and
amortization |
28.0 |
|
|
25.9 |
|
|
27.2 |
|
|
53.9 |
|
|
56.2 |
|
Restructuring charges
(reversals) and other non-recurring items (1) (2) (3) |
2.3 |
|
|
4.2 |
|
|
(1.4 |
) |
|
6.5 |
|
|
(0.2 |
) |
Loss on partial sale of
SMP investment |
— |
|
|
6.1 |
|
|
— |
|
|
6.1 |
|
|
— |
|
Long-lived asset
impairment charges |
14.7 |
|
|
— |
|
|
1.2 |
|
|
14.7 |
|
|
1.3 |
|
Stock compensation
expense |
4.1 |
|
|
3.9 |
|
|
3.4 |
|
|
8.0 |
|
|
7.0 |
|
Equity in loss of
equity method investments (4) |
11.0 |
|
|
86.2 |
|
|
0.7 |
|
|
97.2 |
|
|
1.0 |
|
Adjusted EBITDA [*] |
$ |
20.3 |
|
|
$ |
20.5 |
|
|
$ |
24.2 |
|
|
$ |
40.8 |
|
|
$ |
55.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) For the three months ended March 31, 2016, we
recognized approximately $0.2 million of securities transaction tax
related to the dispositions of approximately 30% investment
interest in SMP, Ltd ("SMP") to our subsidiary. This is a
non-recurring expense that is excluded from Adjusted EBITDA as we
do not consider this to be useful in assessing our on-going
operating performance.
(2) For the three months ended June 30, 2016 and
March 31, 2016, we reserved approximately $0.3 million and $2.1
million, respectively, in net receivables from SunEdison, Inc., our
former parent, due to their filing for Chapter 11 bankruptcy
protection on April 21, 2016. This is excluded from Adjusted EBITDA
as we do not consider this to be useful in assessing our on-going
operating performance.
(3) In the current year, we changed our methodology
for reporting adjusted EBITDA results to exclude expenses related
to our ongoing evaluation of strategic alternatives, consisting
mainly of legal and administration expenses related to these
activities. For the three months ended June 30, 2016 and
March 31, 2016, other non-recurring items included $0.9 million and
$0.4 million, respectively, of strategic alternative related
expenses. These are non-recurring expenses that are excluded from
Adjusted EBITDA as we do not consider this to be useful in
assessing our on-going operating performance.
(4) For the three months ended March 31, 2016, we
recognized $86.2 million equity in loss of equity method
investments, net of tax, primarily due to an $86.9 million
other-than-temporary impairment charge related to SMP. For the
three months ended June 30, 2016, we recognized $11.0 million
equity in loss of equity method investments, net of tax, primarily
due to the recognition of accumulated currency translation losses
as a result of changing from an equity method to cost method
investment for SMP. These charges are non-cash expenses that are
excluded from Adjusted EBITDA as we do not consider this to be
useful in assessing our on-going operating performance.
[*] Adjusted EBITDA is a non-GAAP
financial measure. This measurement should not be viewed as an
alternative to GAAP measures of performance. The presentation of
Adjusted EBITDA should not be construed as an inference that our
future results will be unaffected by unusual or non-recurring
items.
We define Adjusted EBITDA as earnings before net interest
expense; income tax expense (benefit); depreciation and
amortization; restructuring charges (reversals); non-recurring
items; loss on sale of property, plant, and equipment; long-lived
asset impairment charges; pension settlement charges; stock
compensation expense; and equity in loss of equity method
investments. All of the omitted items are either (i) non-cash items
or (ii) items that we do not consider in assessing our on-going
operating performance. Because it omits non-cash items, we feel
that Adjusted EBITDA is less susceptible to variances in actual
performance resulting from depreciation, amortization and other
non-cash charges and more reflective of other factors that affect
our operating performance. Because it omits the other items, we
believe Adjusted EBITDA is also more reflective of our on-going
operating performance. We believe Adjusted EBITDA is useful to
investors in evaluating our operating performance because:
- securities analysts and other interested parties use such
calculations as a measure of financial performance and debt service
capabilities, and
- it is used by our management for internal planning purposes,
including aspects of our operating budget and capital
expenditures.
Adjusted EBITDA has limitations as an analytical tool, and it
should not be considered in isolation or as a substitute for
analysis of our results as reported under GAAP. Some of these
limitations include:
- it does not reflect our cash expenditures or future
requirements for capital expenditures or contractual
commitments,
- it does not reflect changes in, or cash requirements for,
working capital,
- it does not reflect interest expense or the cash requirements
necessary to service interest or principal payments on our
outstanding debt,
- it does not reflect payments made or future requirements for
income taxes,
- it adjusts for restructuring charges (reversals), non-recurring
items, loss on sale of property, plant, and equipment, long-lived
asset impairments, and pension settlement charges which are factors
that we do not consider indicative of future performance,
- it adjusts for non-cash stock compensation expense and equity
in loss of equity method investments to more clearly reflect
comparable period-over-period cash operating performance,
- although it reflects adjustments for factors that we do not
consider indicative of future performance, we may, in the future,
incur expenses similar to the adjustments reflected in our
calculation of Adjusted EBITDA, and
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced in the future and Adjusted EBITDA does not reflect cash
requirements for such replacements.
Investors are encouraged to evaluate each adjustment and the
reasons we consider it appropriate for supplemental analysis.
Investor & Media Contact
Chris Chaney
Director, Investor Relations & Corporate Communications
SunEdison Semiconductor Limited
cchaney@sunedisonsemi.com
+1 636 474 5226
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