Tower Semiconductor Reports 2024 Third Quarter Financial Results

2024 Fourth Quarter Revenue Guidance Completes Year of Quarter Over Quarter Growth

Announces Additional SiPho and SiGe Capacity Build Out, Strategically Serving Expansive Customer Demand

MIGDAL HAEMEK, Israel, Nov. 13, 2024 (GLOBE NEWSWIRE) -- Tower Semiconductor (NASDAQ: TSEM & TASE: TSEM) reports today its results for the third quarter ended September 30, 2024.

Third Quarter of 2024 Results Overview

Revenue for the third quarter of 2024 was $371 million as compared to $351 million for the second quarter of 2024, representing 6% quarter over quarter growth. Revenue for the third quarter of 2023 was $358 million.

Gross profit for the third quarter of 2024 was $93 million as compared to $87 million for the second quarter of 2024 and for the third quarter of 2023.

Operating profit for the third quarter of 2024 was $56 million as compared to $55 million in the second quarter of 2024, which included $6 million restructuring income, net associated with the previously disclosed reorganization and restructure of our Japan operations. Operating profit for the third quarter of 2023 was $362 million and included $314 million, net, from the Intel merger contract termination.

Net profit for the third quarter of 2024 was $55 million, reflecting 15% net margin, and $0.49 basic and diluted earnings per share, as compared to net profit of $53 million, or $0.48 basic and diluted earnings per share for the second quarter of 2024, which included $3 million Japan operations restructuring income net impact. Net profit for the third quarter of 2023 was $342 million, or $3.10 basic and $3.07 diluted earnings per share and included $290 million, net, from the Intel merger contract termination.

Cash flow generated from operating activities in the third quarter of 2024 was $125 million. Investments in equipment and other fixed assets were $128 million, net and debt payments totaled $16 million.

SiPho and SiGe Capacity Expansion Plan

The company is announcing the execution of a $350 million investment plan to expand SiPho (Silicon Photonics) and SiGe (Silicon Germanium) capacity and capabilities. This plan includes the qualification and ramp-up of 200mm capacity, both in San Antonio and Migdal Haemek, and in its 300mm facility in Uozu, to serve high growth, expansive customer demand.

Business Outlook

Tower Semiconductor guides revenue for the fourth quarter of 2024 to be $387 million, with an upward or downward range of 5%. Mid-range guidance reflects year over year and quarter over quarter growth.

Mr. Russell Ellwanger, Chief Executive Officer of Tower Semiconductor, stated: "Throughout this year, including our fourth quarter guidance, we have and will deliver quarter-over-quarter revenue growth. This is driven by strong double-digit year-over-year revenue increases across key technology platforms, including our advanced 300mm RF SOI, 65nm Power BCD, and cutting-edge Silicon Photonics and Silicon Germanium offerings. Our unwavering focus on multi-generation innovation, tied to strong and close partnerships with industry leading customers, continues to position us as an essential contributor to the technologies powering the future."

Ellwanger further added: "With demand for SiGe and SiPho accelerating rapidly, we are investing in multiple factories, increasing our capacity, helping ensure we sustain our foundry leadership in supplying these components, critical to optical transceivers, for the AI-driven data center market."

Teleconference and Webcast

Tower Semiconductor will host an investor conference call today, Wednesday, November 13, 2024, 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 third quarter of 2024 and its business outlook.

The call will be webcast and available through the Investor Relations section of Tower Semiconductor's website at ir.towersemi.com. The pre-registration form required for dial-in participation is accessible here. Upon completing the registration, participants will receive the dial-in details, a unique PIN, and a confirmation email with all necessary information. To access the webcast, click here. The teleconference will be available for replay for 90 days.

Non-GAAP Financial Measures

The Company presents its financial statements in accordance with U.S. generally accepted accounting principles ("GAAP"). The financial information included in the tables below includes unaudited condensed financial data. Some of the financial information, which may be used and/or presented in this release and/or prior earnings related filings and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company, which we may describe as adjusted financial measures and/or reconciled financial measures, are non-GAAP financial measures as defined in Regulation G and related reporting requirements promulgated by the Securities and Exchange Commission (the "SEC") as they apply to our Company. These adjusted financial measures are calculated excluding the following: (i) amortization of acquired intangible assets as included in our operating costs and expenses, (ii) compensation expenses in respect of equity grants to directors, officers, and employees as included in our operating costs and expenses, (iii) merger contract termination fees received from Intel, net of associated cost and taxes following the previously announced Intel contract termination as included in net profit in 2023 and (iv) restructuring income, net, which includes income, net of cost and taxes associated with the reorganization and restructure of our operations in Japan including the cessation of operations of the Arai facility, which occurred during 2022, as included in net profit. These adjusted 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 adjusted financial measures used and/or presented in this release, as well as a reconciliation between the adjusted financial measures and the comparable GAAP financial measures. As used and/or presented in this release and/or prior earnings related filings and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company, as well as may be included and calculated in the tables herein, the term Earnings Before Interest Taxes, Depreciation and Amortization which we define as EBITDA consists of operating profit in accordance with GAAP, excluding (i) depreciation expenses, which include depreciation recorded in cost of revenues and in operating cost and expenses lines (e.g., research and development related equipment and/or fixed other assets depreciation), (ii) stock-based compensation expense, (iii) amortization of acquired intangible assets, (iv) merger contract termination fees received from Intel, net of associated cost following the previously announced Intel contract termination, as included in operating profit and (v) restructuring income, net in relation to the reorganization and restructure of our operations in Japan including the cessation of operations of the Arai facility, as included in operating profit. EBITDA is reconciled in the tables below and/or prior earnings-related filings and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company from GAAP operating profit. EBITDA and the adjusted financial information presented herein and/or prior earnings-related filings and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company, are not a required GAAP financial measure and may not be comparable to a similarly titled measure employed by other companies. EBITDA and the adjusted financial information presented herein and/or prior earnings-related filings and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company, should not be considered in isolation or as a substitute for operating profit, net profit or loss, cash flows provided by operating, investing and financing activities, per share data or other profit or cash flow statement data prepared in accordance with GAAP. The term Net Cash, as may be used and/or presented in this release and/or prior earnings-related filings and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company, is comprised of cash, cash equivalents, short-term deposits, and marketable securities less debt amounts as presented in the balance sheets included herein. The term Net Cash is not a required GAAP financial measure, may not be comparable to a similarly titled measure employed by other companies and should not be considered in isolation or as a substitute for cash, debt, operating profit, net profit or loss, cash flows provided by operating, investing and financing activities, per share data or other profit or cash flow statement data prepared in accordance with GAAP. The term Free Cash Flow, as used and/or presented in this release and/or prior earnings related filings and/or in related public disclosures or filings with respect to the financial statements and/or results of the Company, is calculated to be net cash provided by operating activities (in the amounts of $125 million, $113 million and $402 million for the three months periods ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively (less cash used for investments in property and equipment, net (in the amounts of $128 million, $113 million and $101 million for the three months periods ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively). The term Free Cash Flow is not a required GAAP financial measure, may not be comparable to a similarly titled measure employed by other

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