May 13—Tower Semiconductor’s first-quarter earnings topped analyst sales estimates by $2.5 million, reports Reuters. Although the company grappled with coronavirus pandemic related disruption, it only experienced a 3 percent decline in revenue from 2019.
The Israeli foundry, which specializes in automotive and medical sensor chips, also offered a positive outlook for its full-year earnings.
Tower Semiconductor’s Q1 Results
In the period ending March 31, Tower Semiconductor generated $300 million in sales with $17 million in profit, or earnings per share of $0.16. In Q1 2019, the firm made $310 million against net revenue of $26.2 million, or $0.25 per share. Like contemporaries ON Semiconductor and Infineon, the manufacturer’s income took a hit due to the wide-ranging impact of COVID-19.
That said, analytics firm Refinitiv expected the firm to sell $297.6 million worth of products during Q1.
The foundry posted $68 million in operational cash flow in the first quarter and made a $24 million debt payment. The company also exited the period with a very healthy $251.3 million in cash and equivalents on hand.
CEO Russell Ellwanger said the coronavirus pandemic created “considerable hurdles” for the company in Q1, but it managed to capitalize on every “wafer of opportunity.”
Tower Semiconductor’s Positive Full-Year Outlook
Despite encountering operational headwinds in the March period, Tower Semiconductor believes it will grow its business throughout 2020. For the second quarter, the firm estimates it will earn $310 million in revenue, up from $306 million in Q2 2019. Ellwanger stated his company expects to record growth in the September and December periods as well.
Wall Street has a dimmer view of the company’s prospects, predicting revenue of $308 million in the current quarter.
Analyst skepticism aside, Tower Semiconductor is well-positioned to return to growth in Q2. The firm noted it did not experience any COVID-19 related manufacturing problems in the first quarter, which should be reflected in its next earnings report. The firm’s diverse supply chain, which includes facilities in Israel, California, and Texas, should keep its cash flow steady.
In addition, the component company recently announced a new partnership with HP Indigo. The digital printing unit will use the foundry’s 180nm power management platform in its next-generation industrial presses.
Having addressed the impact of the coronavirus pandemic well, Tower Semiconductor showed it could persevere in the face of adversity. That resilience should help the firm realize its potential for annual growth.