GLOBALFOUNDRIES, INC. Third Quarter 2023 Financial Results (unaudited)
November 7, 2023
Disclaimer
This presentation and the accompanying oral presentation include "forward-looking statements," that reflect our current expectations and views of future events. These forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995 and include but are not limited to, statements regarding our financial outlook, future guidance, product development, business strategy and plans, and market trends, opportunities and positioning. These statements are based on current expectations, assumptions, estimates, forecasts, projections and limited information available at the time they are made. Words such as "expect," "anticipate," "should," "believe," "hope," "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "might," "could," "intend," "shall," "outlook," "on track," and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are subject to a broad variety of risks and uncertainties, both known and unknown. Any inaccuracy in our assumptions and estimates could affect the realization of the expectations or forecasts in these forward-looking statements. For example, our business could be impacted by geopolitical conditions such as the ongoing political and trade tensions with China and the wars in Ukraine and Israel; the market for our products may develop or recover more slowly than expected or than it has in the past; we may fail to achieve the full benefits of our restructuring plan; our operating results may fluctuate more than expected; there may be significant fluctuations in our results of operations and cash flows related to our revenue recognition or otherwise; a network or data security incident that allows unauthorized access to our network or data or our customers' data could damage our reputation; we could experience interruptions or performance problems associated with our technology, including a service outage; and global economic conditions could deteriorate, including due to increasing interest rates, rising inflation, and any potential recession. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results or outcomes to differ materially from those contained in any forward-looking statements we may make. Moreover, we operate in a competitive and rapidly changing market, and new risks may emerge from time to time. You should not rely upon forward-looking statements as predictions of future events. These statements are based on our historical performance and on our current plans, estimates and projections in light of information currently available to us, and therefore you should not place undue reliance on them.
Although we believe that the expectations reflected in our statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances described in the forward-looking statements will be achieved or occur. Moreover, neither we, nor any other person, assumes responsibility for the accuracy and completeness of these statements. Recipients are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date such statements are made and should not be construed as statements of fact. Except to the extent required by federal securities laws, we undertake no obligation to update any information or any forward-looking statements as a result of new information, subsequent events, or any other circumstances after the date hereof, or to reflect the occurrence of unanticipated events. For a discussion of potential risks and uncertainties, please refer to the risk factors and cautionary statements in our 2022 Annual Report on Form 20-F, current reports on Form 6-K and other reports filed with the Securities and Exchange Commission. Copies of our SEC filings are available on our Investor Relations website, investors.gf.com, or from the SEC website, www.sec.gov.
This presentation and the accompanying oral presentation also contain estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry and business. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We have not independently verified the industry data generated by independent parties and contained in this presentation and, accordingly, we cannot guarantee their accuracy or completeness. In addition, projections, assumptions, and estimates of our future performance and the future performance of the markets in which we compete are necessarily subject to a high degree of uncertainty and risk.
In addition to the financial information presented in accordance with IFRS, this presentation and the accompanying oral presentation include the following Non-IFRS metrics: adjusted gross profit, adjusted operating profit (loss), adjusted net income (loss), adjusted selling, general and administrative , adjusted research and development, adjusted diluted earnings (loss) per share ("EPS"), adjusted EBITDA, free cash flow, adjusted operating margin and adjusted EBITDA margin. We define adjusted gross profit as gross profit adjusted for share-based compensation expense and restructuring charges. 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, restructuring charges, and the associated tax impact. We define adjusted selling, general and administrative as selling, general and administrative adjusted for share-based compensation expense. We define adjusted research and development as research and developmen adjusted for share-based compensation expense. We define adjusted diluted EPS as adjusted net income (loss) divided by the dilutive shares. We define free cash flow as cashflow provided by (used in) operating activities less purchases of property, plant and equipment and intangible assets. We define adjusted EBITDA as net income (loss), adjusted for the impact of finance expense, finance income, income tax expense, depreciation, amortization, share-based compensation expense, divestiture gains and associated expenses, restructuring charges, labor optimization initiatives, and litigation settlements. We define adjusted gross margin as adjusted gross profit divided by revenue. We define adjusted operating margin as adjusted operating profit divided by net revenue. We define adjusted EBITDA margin as adjusted EBITDA divided by net revenue.
We believe that in addition to our results determined in accordance with IFRS, these 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 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. Management believes that free cash flow as a Non-IFRS measure is helpful to investors as it provides insights into the nature and amount of cash the Company generates in the period. For further information regarding these non-IFRS measures, please refer to the Appendix.
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 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.
GlobalFoundries © 2023 All Rights Reserved | 2 |
Q3'23 Results
3
Key Q3'23 Results
(Unaudited)
Revenue
Millions USD
-11%
2,074
1,852
Q3'22Q3'23
Adjusted EBITDA & Margin
Millions USD
-16%
793
667
38.2%39.1%
36.0%
Q3'22Q3'23
Wafer Shipments
300mm equivalents (k)
-10%
637
575
Q3'22Q3'23
Note:
Adjusted EBITDA is a Non-IFRS measure which we define adjusted EBITDA as net income (loss), excluding the impact of finance expense, finance income, income tax expense, depreciation, amortization, share-based compensation expense, divestiture gains and associated expenses, restructuring charges, labor optimization initiatives, and litigation settlements. See "Unaudited reconciliation of Net Income to Adjusted EBITDA" found in the Appendix. Effective Q3'22, the Company has revised its definition of Adjusted EBITDA to include an adjustment for finance income. Adjusted EBITDA margin is adjusted EBITDA divided by net revenue.
GlobalFoundries © 2023 All Rights Reserved | 4 |
Key Recent Announcements
The U.S. Department of Defense awarded GF a new 10-year contract for a supply of securely manufactured, U.S.-made semiconductors for use across a wide range of critical aerospace and defense applications.
GF expanded its world- | GF announced its most |
class global operations | advanced RF technology, |
with official grand | 9SW RFSOI, that will |
openings at its | offer significant |
fabrication plant in | improvements in |
Singapore and new | performance and |
operations support | integration for 5G and |
facility in Penang, | wireless communication |
Malaysia, creating 1,300 | applications. |
new jobs combined. |
GlobalFoundries © 2023 All Rights Reserved | 5 |
Quarterly Revenue Trend
(Unaudited, Millions USD)
2,074 | 2,101 | -11% | |||
1,841 | 1,845 | 1,852 | Y/Y | ||
Q3'22 | Q4'22 | Q1'23 | Q2'23 | Q3'23 |
GlobalFoundries © 2023 All Rights Reserved | 6 |
Adjusted Gross Margin Trend
(Unaudited)
29.9% | 30.1% | 28.5% | 29.6% | 29.2% | -70 bps |
Q3'22 | Q4'22 | Q1'23 | Q2'23 | Q3'23 |
Note:
Adjusted gross profit is a Non-IFRS measure which we define as gross profit for a particular period, adjusted for share-based compensation expense; adjusted gross margin is adjusted gross profit divided by revenue. See the Appendix for the unaudited reconciliation of IFRS to Non-IFRS metrics.
GlobalFoundries © 2023 All Rights Reserved | 7 |
Adjusted EBITDA Margins Trend | ||||
(Unaudited) | ||||
38.2% | 39.1% | (220) bps | ||
36.2% | 36.0% | |||
35.6% | ||||
Q3'22 | Q4'22 | Q1'23 | Q2'23 | Q3'23 |
Note:
Adjusted EBITDA is a Non-IFRS measure which we define as net income (loss), excluding the impact of finance expense, finance income, income tax expense, depreciation, amortization, share-based compensation expense, divestiture gains and associated expenses, restructuring charges, labor optimization initiatives, and litigation settlements. Adjusted EBITDA margin is adjusted EBITDA divided by net revenue. See the Appendix for the unaudited reconciliation of IFRS to Non-IFRS metrics. Beginning in Q3 2022 the Company has revised its definition of Adjusted EBITDA to include an adjustment for finance income.
GlobalFoundries © 2023 All Rights Reserved | 8 |
Q3'23 Financial Summary
(Unaudited, in millions USD, except per share data and wafer shipments)
Year-over-year | Sequential | ||||||||||||
Q3'23 | Q2'23 | Q3'22 | Q3'23 vs Q3'22 | Q3'23 vs Q2'23 | |||||||||
Net revenue | $ | 1,852 | $ | 1,845 | $ | 2,074 | $ | (222) | (11)% | $ | 7 | - % | |
Gross profit | 529 | 532 | 610 | $ | (81) | (13)% | $ | (3) | (1)% | ||||
Gross margin | 28.6 % | 28.8 % | 29.4 % | (80)bps | (20)bps | ||||||||
Adjusted gross profit(1) | $ | 541 | $ | 546 | $ | 621 | $ | (80) | (13)% | $ | (5) | (1)% | |
Adjusted gross margin(1) | 29.2 % | 29.6 % | 29.9 % | (70)bps | (40)bps | ||||||||
Operating profit | $ | 261 | $ | 275 | $ | 357 | $ | (96) | (27)% | $ | (14) | (5)% | |
Operating margin | 14.1 % | 14.9 % | 17.2 % | (310)bps | (80)bps | ||||||||
Adjusted operating profit(1) | $ | 322 | $ | 338 | $ | 389 | $ | (67) | (17)% | $ | (16) | (5)% | |
Adjusted operating margin(1) | 17.4 % | 18.3 % | 18.8 % | (140)bps | (90)bps | ||||||||
Net income | $ | 249 | $ | 237 | $ | 336 | $ | (87) | (26)% | $ | 12 | 5 % | |
Net income margin | 13.4 % | 12.8 % | 16.2 % | (280)bps | +60bps | ||||||||
Adjusted net income (1)(2) | $ | 308 | $ | 297 | $ | 368 | $ | (60) | (16)% | $ | 11 | 4 % | |
Adjusted net income margin(1) | 16.6 % | 16.1 % | 17.7 % | (110)bps | +50bps | ||||||||
Diluted earnings per share ("EPS") | $ | 0.45 | $ | 0.43 | $ | 0.61 | $ | (0.16) | (26)% | $ | 0.02 | 5 % | |
Adjusted diluted earnings per share(1) | $ | 0.55 | $ | 0.53 | $ | 0.67 | $ | (0.12) | (18)% | $ | 0.02 | 4 % | |
Adjusted EBITDA(1)(3) | $ | 667 | $ | 668 | $ | 793 | $ | (126) | (16)% | $ | (1) | - % | |
Adjusted EBITDA margin(1) | 36.0 % | 36.2 % | 38.2 % | (220)bps | (20)bps | ||||||||
Cash from operations | $ | 416 | $ | 546 | $ | 679 | $ | (263) | (39)% | $ | (130) | (24)% | |
Wafer shipments (300MM Equivalent) (in thousands) | 575 | 573 | 637 | (62) | (10)% | 2 | - % |
Note:
- Adjusted gross profit, adjusted operating profit, adjusted net income, adjusted diluted EPS, and adjusted EBITDA and related margins are adjusted Non-IFRS metrics: see Appendix for the unaudited reconciliation of IFRS to non-IFRS metrics.
- Beginning in Q4 2022, the Company revised its definition of adjusted net income to include an adjustment for restructuring charges and the associated tax impact. The change was made due to a restructuring undertaken in Q4 2022. The Company believes the revised definition provides management and investors with more useful information to evaluate the operations of our business. Adjusted net income is now defined as net income adjusted for share-based compensation expense, restructuring charges and the associated tax impact.
- Beginning in Q3 2022, the Company revised its definition of adjusted EBITDA to include an adjustment for finance income. The change was made due to the Company making an investment during Q2 2022 of approximately $1.0 billion in marketable securities. The Company believes the revised definition provides management and investors more useful information to evaluate the operations of our business. Adjusted EBITDA is now defined as net income (loss) adjusted for the impact of finance expense, finance income, income tax expense, depreciation, amortization, share-based compensation expense, divestiture gains and associated expenses, restructuring charges, labor optimization initiatives and litigation settlements.
GlobalFoundries © 2023 All Rights Reserved | 9 |
(Unaudited, in millions USD) | Q3'23 Revenue by End Market | |
((in millions USD) | ||
Year-over-year | Sequential | |
Q3'23 Q2'23 Q3'22 Q3'23 vs Q3'22 | Q3'23 vs Q2'23 |
Smart Mobile Devices | $779 | $783 | $954 | $(175) | (18)% | $(4) | (1)% |
Communications Infrastructure & Datacenter | $156 | $211 | $368 | $(212) | (58)% | $(55) | (26)% |
Home and Industrial IoT | $371 | $358 | $398 | $(27) | (7)% | $13 | 4% |
Automotive | $303 | $245 | $95 | $208 | 219% | $58 | 24% |
Personal Computing | $37 | $52 | $48 | $(11) | (23)% | $(15) | (29)% |
Non-Wafer and Corporate Other Revenue | $206 | $196 | $211 | $(5) | (2)% | $10 | 5% |
Revenue | $1,852 | $1,845 | $2,074 | $(222) | (11)% | $7 | -% |
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GLOBALFOUNDRIES Inc. published this content on 07 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 November 2023 15:05:12 UTC.
