GlobalFoundries reports first quarter 2022 financial results

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GlobalFoundries reports first quarter 2022 financial results

Tue, 05/10/2022 - 4:34pm -- tim
Revenue up 37% year-over-year, Record Gross Margin and Net Income

Vermont Business Magazine GlobalFoundries Inc (GF) (Nasdaq: GFS) today announced preliminary financial results for the first quarter ended March 31, 2022. GF operates a manufacturing plant that fabricates integrated circuits in Essex Junction, Vermont. GF is headquartered in Malta, NY.

Key First Quarter Financial Highlights

  • Record revenue of $1.94 billion, up 37% year-over-year.
  • Record gross margin of 24.2% and adjusted gross margin of 25.3%.
  • Record operating margin of 11.6% and adjusted operating margin of 14.4%.
  • Record net income of $178 million and adjusted net income of $232 million.
  • Record adjusted EBITDA margin of 36.0%.
  • Cash and cash equivalents of $3.26 billion.

“In the first quarter the GF team delivered on its commitments to customers and shareholders,” said GF CEO Dr. Thomas Caulfield. “We grew revenue 37% year-over-year, delivered record profitability and made significant progress towards our long-term financial model. Despite global supply chain challenges, the GF team continues to execute to plan, and we remain on track to deliver a strong year of growth and profitability.”

Recent Business Highlights:

  • GF announced GF Fotonix™, its next-generation silicon photonics platform. GF is collaborating with industry leaders including Broadcom, Cisco Systems, Inc, Marvell and NVIDIA, along with breakthrough photonic leaders including Ayar Labs, Lightmatter, PsiQuantum, Ranovus and Xanadu, to deliver innovative, unique, feature-rich solutions to solve some of the biggest challenges facing data centers today.
  • GF announced the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR”), for Onsemi’s proposed acquisition of GF’s East Fishkill, NY site and fabrication facilities announced in 2019. The expiration of the HSR waiting period satisfies all of the necessary regulatory requirements and the transaction is on track to close at the end of 2022 as planned.
  • GF announced the appointment of Bobby Yerramilli-Rao as an independent director of the company’s board of directors. Dr. Yerramilli-Rao is currently chief strategy officer and corporate vice president at Microsoft, where he is responsible for developing and driving growth-oriented strategies.
  • As part of GF's celebration of Women's History Month and International Women's Day, GF hosted its 3rd GlobalWomen conference, celebrating the vital role of women in technology.  

Unaudited Summary Quarterly Results (in millions USD, except per share amounts and wafer shipments)1

                Year-over-year   Sequential
    Q1'21   Q4'21   Q1'22   Q1'22 vs Q1'21   Q1'22 vs Q4'21
                         
Net revenue   $ 1,418     $ 1,847     $ 1,940     $ 522 37 %   $ 93   5 %
                         
Gross profit   $ 99     $ 384     $ 469     $ 370 374 %   $ 85   22 %
Gross margin     7.0 %     20.8 %     24.2 %     +1,720bps     +340bps
                         
Adjusted gross profit1   $ 99     $ 397     $ 490     $ 391 395 %   $ 93   23 %
Adjusted gross margin     7.0 %     21.5 %     25.3 %     +1,830bps     +380bps
                         
Operating profit (loss)   $ (95 )   $ 87     $ 225     $ 320 337 %   $ 138   159 %
Operating margin   (6.7)     4.7 %     11.6 %     +1,830bps     +690bps
                         
Adjusted operating profit (loss)1   $ (95 )   $ 142     $ 279     $ 374 394 %   $ 137   96 %
Adjusted operating margin   (6.7)     7.7 %     14.4 %     +2,110bps     +670bps
                         
Net income (loss)   $ (127 )   $ 43     $ 178     $ 305 240 %   $ 135   314 %
Net income (loss) margin   (9.0)     2.3 %     9.2 %     +1,820bps     +690bps
                         
Adjusted net income (loss)1   $ (127 )   $ 98     $ 232     $ 359 283 %   $ 134   137 %
Adjusted net income (loss) margin   (9.0)     5.3 %     12.0 %     +2,100bps     +670bps
                         
Diluted (loss) earnings per share ("EPS")   $ (0.25 )   $ 0.08     $ 0.33     $ 0.58 232 %   $ 0.25   301 %
                         
Adjusted diluted EPS1   $ (0.25 )   $ 0.18     $ 0.42     $ 0.67 268 %   $ 0.24   133 %
                         
Adjusted EBITDA1   $ 294     $ 584     $ 698     $ 404 137 %   $ 114   20 %
Adjusted EBITDA margin     20.7 %     31.6 %     36.0 %     +1,530bps     +440bps
                         
Cash from operations   $ 148     $ 1,148     $ 845     $ 697 471 %   $ (303 ) (26)%    
                         
Wafer shipments (300MM Equivalent) (in thousands)     548       622       625       77 14 %     3   0.5 %

1Adjusted gross profit, adjusted operating profit (loss), adjusted net income (loss), adjusted diluted EPS, and adjusted EBITDA are adjusted non-IFRS metrics; please see the reconciliation of IFRS to adjusted non-IFRS metrics in the section "Unaudited Reconciliation of IFRS to Adjusted non-IFRS" below.

Summary of Second Quarter 2022 Outlook (unaudited, in millions USD except per share amounts)1

  IFRS   Share-based compensation   Non-IFRS Adjusted
Net revenue $1,955 - $1,985      
Gross Profit $470 - $504   $27 - $33   $503 - $531
Gross Margin (mid-point) 24.7%         26.2%  
Operating Profit $206 - $251   $54 - $66   $272 - $305
Operating Margin (mid-point) 11.6%         14.6%  
Net Income $169 - $211   $54 - $66   $235 - $265
Net Income Margin (mid-point) 9.6%         12.7%  
Diluted EPS $0.31 - $0.38       $0.43 - $0.48
Adjusted EBITDA       $705 - $745
Adj. EBITDA Margin (mid-point)         36.8%  

1The guidance provided above contains forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995, and is subject to the safe harbors created therein. The guidance includes management’s beliefs and assumptions and is based on information currently available. GF has not provided a reconciliation of its Second Fiscal Quarter outlook for adjusted Non-IFRS EBITDA and related Margin because estimates of all of the reconciling items cannot be provided without unreasonable efforts. Certain factors that are materially significant to GF’s ability to estimate these items cannot be reasonably predicted.

Unaudited Consolidated Statements of Operations

    Three Months Ended
(in millions USD, except for per share amounts)   March 31, 2021   March 31, 2022
         
Net revenue   $ 1,418     $ 1,940  
Cost of sales     1,319       1,471  
Gross profit     99       469  
Operating expenses:        
Research and development     103       128  
Sales, marketing, general and administrative     91       116  
Total operating expenses     194       244  
Operating profit (loss)     (95 )     225  
Finance expense, net     (28 )     (28 )
Other income     7       10  
Income tax expense     (11 )     (29 )
Net income (loss)   $ (127 )   $ 178  
Attributable to:        
Shareholders of GlobalFoundries     (126 )   $ 179  
Non-controlling interest     (1 )     (1 )
Earnings (loss) per share:        
Basic   $ (0.25 )   $ 0.34  
Diluted   $ (0.25 )   $ 0.33  
Shares used in earnings (loss) per share calculation        
Basic     500       532  
Diluted     500       549  

Unaudited Consolidated Statements of Financial Position

(in millions USD)   December 31, 20211   March 31, 20222
         
Assets:        
Cash and cash equivalents   $ 2,939     $ 3,264  
Receivables, prepayments and other     1,231       1,210  
Inventories     1,121       1,185  
Current assets     5,291       5,659  
Deferred tax assets     353       337  
Property, plant, and equipment, net     8,713       9,173  
Other assets     671       733  
Noncurrent assets     9,737       10,243  
Total assets   $ 15,028     $ 15,902  
Liabilities and equity:        
Current portion of long-term debt   $ 297     $ 281  
Other current liabilities     2,866       3,039  
Current liabilities     3,163       3,320  
Noncurrent portion of long-term debt     1,716       1,830  
Other liabilities     2,116       2,413  
Noncurrent liabilities     3,832       4,243  
Shareholders' equity:        
Common stock/additional paid-in capital     23,498       23,551  
Accumulated deficit     (15,469 )     (15,290 )
Accumulated other comprehensive income (loss)     (54 )     21  
Non-controlling interest     58       57  
Total liabilities and equity   $ 15,028     $ 15,902  

1Audited annual statement of consolidated financial position
2Unaudited interim statement of consolidated financial position

Unaudited Consolidated Statements of Cash Flows

    Three Months Ended
(in millions USD)   March 31, 2021   March 31, 2022
         
Cash flows from operating activities:        
Net income (loss) $ (127 )   $ 178  
Depreciation and amortization   377       408  
Finance expense, net   8       9  
Deferred income taxes   15       19  
Other non-cash operating activities   (30 )     42  
Net change in working capital   (95 )     189  
Net cash provided by operating activities   148       845  
       
Cash flows from investing activities:      
Purchases of property, plant, equipment, and intangible assets   (302 )     (643 )
Other investing activities   45       4  
Net cash used in investing activities   (257 )     (639 )
       
Cash flows from financing activities:      
Repayments of shareholder loan   (126 )      
Proceeds (repayment) of debt, net   (75 )     107  
Other financing activities   39       11  
Net cash (used in) provided by financing activities   (162 )     118  
Effect of exchange rate changes   (2 )     1  
Net change in cash and cash equivalents   (273 )     325  
Cash and cash equivalents at the beginning of the period   908       2,939  
Cash and cash equivalents at the end of the period $ 635     $ 3,264  

Unaudited Reconciliation of IFRS to Adjusted Non-IFRS

    Three Months Ended
(in millions USD)   March 31, 2021   December 31, 2021   March 31, 2022
             
Gross profit   $ 99     $ 384   $ 469
Share based compensation         $ 13   $ 21
Adjusted gross profit   $ 99     $ 397   $ 490
             
Operating profit (loss)   $ (95 )   $ 87   $ 225
Share based compensation         $ 55   $ 54
Adjusted operating profit (loss)   $ (95 )   $ 142   $ 279
             
Net income (loss)   $ (127 )   $ 43   $ 178
Share based compensation         $ 55   $ 54
Adjusted net income (loss)   $ (127 )   $ 98   $ 232
             
Diluted EPS   $ (0.25 )   $ 0.08   $ 0.33
Share based compensation   $     $ 0.10   $ 0.09
Adjusted diluted EPS   $ (0.25 )   $ 0.18   $ 0.42

Unaudited Reconciliation of Net Income (Loss) to Adjusted EBITDA

    Three Months Ended
(in millions USD)   March 31, 2021   December 31, 2021   March 31, 2022
             
Net income (loss) for the period   $ (127 )   $ 43   $ 178
Adjustments:            
Depreciation and amortization   $ 377     $ 419   $ 408
Finance expense   $ 29     $ 28   $ 29
Income tax expense (benefit)   $ 10     $ 26   $ 29
Share based compensation         $ 55   $ 54
Restructuring and corporate severance programs   $ 5     $ 5    
(Gains)/Losses on transactions, legal settlements and transaction expenses         $ 8    
Adjusted EBITDA   $ 294     $ 584   $ 698

Adjusted Financial Measures (Non-IFRS)

In addition to the financial information presented in accordance with IFRS, this press release includes the following adjusted non-IFRS metrics: adjusted gross profit (loss), adjusted operating profit (loss), adjusted net income (loss), adjusted diluted EPS and adjusted EBITDA. We define adjusted gross profit (loss) as gross profit (loss) adjusted for share-based compensation expense. We define adjusted operating profit (loss) as profit (loss) from operations adjusted for share-based compensation expense. We define adjusted net income (loss) as net income (loss) adjusted for share-based compensation expense. We define adjusted diluted EPS as adjusted net income (loss) divided by the dilutive shares. We define adjusted EBITDA as net income (loss), excluding the impact of finance expense, income tax expense, depreciation, amortization, share-based compensation expense, transaction gains and associated expenses, restructuring charges and litigation settlements.

We believe that in addition to our results determined in accordance with IFRS, these adjusted non-IFRS measures provide useful information to both management and investors in measuring our financial performance and highlight trends in our business that may not otherwise be apparent when relying solely on IFRS measures. These adjusted non-IFRS financial measures provide supplemental information regarding our operating performance that excludes certain gains, losses and non-cash charges that occur relatively infrequently and/or that we consider to be unrelated to our core operations. For further information regarding these non-IFRS measures, please refer to "Unaudited Reconciliation of IFRS to Adjusted Non-IFRS" table above.

Adjusted non-IFRS financial information is presented for supplemental informational purposes only and should not be considered in isolation or as a substitute for financial information presented in accordance with IFRS. Our presentation of adjusted non-IFRS measures should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. Other companies in our industry may calculate these measures differently, which may limit their usefulness as a comparative measure.

Conference Call and Webcast Information

GF will host a conference call with the financial community on Tuesday, May 10, 2022 at 4:30 p.m. U.S. Eastern Time (ET) to review the First Quarter 2022 results in detail. Interested parties may join the scheduled conference call by dialing the following numbers:

Within the U.S.:                 1-877-788-0411
Outside the U.S.:                 1-615-489-8522
Participant Passcode:         8265345

The call will be webcast and can be accessed from the GF Investor Relations website https://investors.gf.com. A replay of the call will be available on the GF Investor Relations website within 24 hours of the actual call.

About GlobalFoundries

GlobalFoundries® (GF®) is one of the world’s leading semiconductor manufacturers. GF is redefining innovation and semiconductor manufacturing by developing and delivering feature-rich process technology solutions that provide leadership performance in pervasive high growth markets. GF offers a unique mix of design, development and fabrication services. With a talented and diverse workforce and an at-scale manufacturing footprint spanning the U.S., Europe and Asia, GF is a trusted technology source to its worldwide customers. For more information, visit www.gf.com.

MALTA, N.Y., May 10, 2022 (GLOBE NEWSWIRE) -- GlobalFoundries Inc