ASE Technology Holding Co., Ltd. Reports Unaudited Consolidated Financial Results for the Second Quarter of 2018

TAIPEI, Taiwan, July 27, 2018 /PRNewswire/ -- ASE Technology Holding Co., Ltd. (TAIEX: 3711, NYSE: ASX) ("We", "ASEH", or the "Company") was jointly established by Advanced Semiconductor Engineering, Inc. ("ASE") and Siliconware Precision Industries Co., Ltd. ("SPIL") on April 30, 2018.  The financial results for second quarter of 2018 (2Q18) reflect operations of ASE starting from April 1, 2018 and operations of ASEH starting from April 30, 2018.  The financial results for 1Q2018 and 2Q2017 reflect the operations of ASE and its subsidiaries prior to the establishment of the Company.  As a result, the Company's financial results for 2Q18 may not be comparable to those of 1Q2018 and 2Q2017.  ASEH, the leading provider of semiconductor manufacturing services in assembly and test, today reported unaudited net revenues[1] of NT$84,501 million for 2Q18, up by 28% year-over-year and up by 30% sequentially.  Net income attributable to shareholders of the parent for the quarter totaled NT$11,463 million, up from a net income attributable to shareholders of the parent of NT$7,847 million in 2Q17 and up from a net income attributable to shareholders of the parent of NT$2,096 million in 1Q18.  Basic earnings per share for the quarter were NT$2.70 (or US$0.183 per ADS), compared to adjusted basic earnings per share of NT$1.93 for 2Q17 and NT$0.49 for 1Q18.  Diluted earnings per share for the quarter were NT$2.69 (or US$0.182 per ADS), compared to adjusted diluted earnings per share of NT$1.78 for 2Q17 and NT$0.48 for 1Q18.

RESULTS OF OPERATIONS

2Q18 Results Highlights - Consolidated

• Net revenue contribution from packaging operations, testing operations, EMS operations and others, each represented approximately 52%, 10%, 36% and 2%, respectively, of total net revenues for the quarter.
• Cost of revenue was NT$70,791 million for the quarter, up from NT$54,578 million in 1Q18.
• Raw material cost totaled NT$39,107 million for the quarter, representing 46% of total net revenues.
• Labor cost totaled NT$11,673 million for the quarter, representing 14% of total net revenues.
• Depreciation, amortization and rental expenses totaled NT$10,196 million for the quarter.
• Gross margin increased 0.2 percentage points to 16.2% in 2Q18 from 16.0% in 1Q18.
• Operating margin was 6.4% in 2Q18 compared to 6.6% in 1Q18.
• In terms of non-operating items:
• Net interest expense was NT$819 million.
• Net foreign exchange loss of NT$1,469 million was primarily attributable to the appreciation of U.S. dollar against NT dollar.
• Gain on valuation of financial assets and liabilities was NT$2,341 million.
• Net loss on equity-method investments was NT$201 million, including NT$67 million of the share of loss from our investment in Siliconware Precision Industries Co., Ltd. in April when it was accounted for using the equity method before the establishment of the Company.
• Other net non-operating income of NT$7,681 million were primarily attributable to gain on revaluation of acquired subsidiary and miscellaneous income.  Total non-operating income for the quarter was NT$7,533 million.
• Income before tax was NT$12,920 million for 2Q18, compared to NT$3,776 million in 1Q18.  We recorded income tax expenses of NT$1,268 million for the quarter, compared to NT$1,420 million in 1Q18.
• In 2Q18, net income attributable to shareholders of the parent was NT$11,463 million, compared to net income attributable to shareholders of the parent of NT$7,847 million in 2Q17 and net income attributable to shareholders of the parent of NT$2,096 million in 1Q18.
• Our total number of shares outstanding at the end of the quarter was 4,319,237,132, including treasury stock owned by our subsidiaries.  Our 2Q18 basic earnings per share of NT$2.70 (or US$0.183 per ADS) were based on 4,246,028,841 weighted average numbers of shares outstanding in 2Q18. Our 2Q18 diluted earnings per share of NT$2.69 (or US$0.182 per ADS) were based on 4,252,766,558 weighted average number of shares outstanding in 2Q18.

2Q18 Results Highlights - ATM[2]

• Cost of revenues was NT$43,689 million for the quarter, up by 49% sequentially.
• Raw material cost totaled NT$14,986 million for the quarter, representing 27% of total net revenues.
• Labor cost totaled NT$10,266 million for the quarter, representing 19% of total net revenues.
• Depreciation, amortization and rental expenses totaled NT$9,628 million for the quarter.
• Gross margin decreased 0.9 percentage points to 19.9% in 2Q18 from 20.8% in 1Q18.
• Operating margin was 8.4% in 2Q18 compared to 9.2% in 1Q18.

2Q18 Results Highlights - EMS

• Cost of revenues for the quarter was NT$27,608 million, up by 6% sequentially.
• Raw material cost totaled NT$24,269 million for the quarter, representing 80% of total net revenues.
• Labor cost totaled NT$1,386 million for the quarter, representing 5% of total net revenues.
• Depreciation, amortization and rental expenses totaled NT$452 million for the quarter.
• Gross margin were both 9.4% in 2Q18 and 1Q18.
• Operating margin decreased to 2.7% in 2Q18 from 3.3% in 1Q18.

LIQUIDITY AND CAPITAL RESOURCES

• Capital expenditures in 2Q18 totaled US$336 million, of which US$193 million were used in packaging operations, US$115 million in testing operations, US$19 million in EMS operations and US$9 million in interconnect materials operations.
• As of June 30, 2018, total unused credit lines amounted to NT$135,603 million.
• Current ratio was 1.11 and net debt to equity ratio was 0.62 as of June 30, 2018.
• Total number of employees was 93,664 as of June 30, 2018, compared to 68,985 as of March 31, 2018.

Business Review

Customers

ATM consolidated Basis

• Our five largest customers together accounted for approximately 39% of our total net revenues in 2Q18, compared to 34% in 1Q18. One customer accounted for more than 10% of our total net revenues in 2Q18.
• Our top 10 customers contributed 52% of our total net revenues for the quarter, compared to 48% in 1Q18.
• Our customers that are integrated device manufacturers or IDMs accounted for 37% of our total net revenues for the quarter, compared to 46% in 1Q18.

EMS Basis

• Our five largest customers together accounted for approximately 75% of our total net revenues in 2Q18, compared to 76% in 1Q18. One customer accounted for more than 10% of our total net revenues in 2Q18.
• Our top 10 customers contributed 87% of our total net revenues during the quarter both in 2Q18 and 1Q18.

About ASE Technology Holding Co., Ltd. ("ASEH")

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 more information, please visit our website at 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. Our actual results of operations, financial condition or business prospects may differ materially from those expressed or implied in these forward-looking statements for a variety of reasons, including 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 global economic crisis; 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 2017 Annual Report on Form 20-F for our predecessor company, Advanced Semiconductor Engineering, Inc., filed on March 28, 2018.

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SOURCE ASE Technology Holding Co., Ltd.