SunEdison Semiconductor Limited (NASDAQ:SEMI) ("SunEdison
Semiconductor" or the “Company”) today reported financial results
for the fourth quarter and year ended December 31, 2015.
Fourth Quarter and Full 2015
Summary:
- Successful completion of partial debt refinancing; lowering
future interest expense, enhancing the capital structure
flexibility and improving covenant coverage
- Fourth quarter net sales down 3.9% sequentially, driven by
lower small diameter volume and generally weaker pricing
- Full year 2015 gross margin increased to 9.9% from 9.4% despite
7.5% lower net sales
- Year-end cash and cash equivalents of $83.5 million; down $4.7
million year-over-year following significant investment in next
generation products
Results Review
Net sales for the 2015 fourth quarter were
$181.7 million, down 3.9% sequentially compared to $189.0 million
in the prior quarter. The sequential decline was primarily a
result of lower small diameter wafer volume and generally weaker
prices.
Net sales for the full year 2015 were $777.5
million, down 7.5% from $840.1 million in the prior
year. The year-over-year decline was primarily due to
wafer price decreases, partly offset by volume increases.
Gross profit for the 2015 fourth quarter was
$15.1 million, or 8.3% of net sales, compared to $21.3 million, or
11.3% of net sales in the prior quarter. Gross profit
declined sequentially primarily due to lower prices and volume,
only partially offset by manufacturing cost reductions. Third
quarter 2015 gross profit included a $2.0 million non-cash pension
settlement charge.
Gross profit for the full year 2015 was $77.1
million, down $1.9 million compared to $79.0 in million the prior
year. Full year 2015 gross margin increased to 9.9% from 9.4%
the prior year despite 7.5% lower net sales due to a combination of
foreign exchange benefits, lower raw material cost, higher volume
and manufacturing cost reductions.
“Despite tough market conditions in the second
half of 2015, we executed well to grow our Adjusted EBITDA over 12%
in 2015, and we continue to work towards our long-term EBITDA
goals,” said Shaker Sadasivam, President and CEO. “We are
also evaluating various strategic alternatives and will provide
updates when appropriate. I would like to take this
opportunity to thank all of our employees for their significant
efforts over the past year, and I look forward to another good year
in 2016.”
Fourth quarter 2015 operating loss was $15.4
million, compared to an operating loss of $68.8 million in the 2015
third quarter. Fourth quarter operating loss included a $3.1
million restructuring charge related to the Company’s decisions to
close its facility in Ipoh, Malaysia and to cease crystal
production in its St. Peters, MO facility, and a $2.7 million asset
impairment charge. Third quarter 2015 operating loss included
non-cash charges of $56.7 million related to asset impairments from
the Ipoh facility closure, $3.9 million in other restructuring
activities and $4.8 million related to a non-cash pension
settlement charge.
Full year 2015 operating loss was $101.9
million, compared to an operating loss of $81.8 million in the
prior year. Operating loss for the full year 2015 included
impairment charges of $60.7 million and a restructuring charge of
$6.8 million primarily related to the Ipoh closure. Full year
2014 operating loss included long-lived impairment charges of $59.4
million, primarily related to the sale of the Company’s facility in
Merano, Italy. Full year 2014 operating loss also included
restructuring reversals of $22.9 million primarily related to a
favorable settlement of a polysilicon supply agreement, severance
reversals related to the Merano facility and other net favorable
revisions to estimated restructuring liabilities.
Fourth quarter 2015 operating cash flow was
$21.8 million compared to $8.4 million in the prior quarter.
The increase was primarily influenced by changes in working
capital. Fourth quarter 2015 cash used in investing
activities of $26.1 million included $23.5 million of capital
spending. Full year 2015 capital spending was $106.3 million
to further the advancement of the Company’s next generation
products. The Company ended the year with cash and cash
equivalents of $83.5 million, down $7.3 million compared to the
prior quarter, and down only $4.7 million year-over-year.
On December 29, 2015, the Company amended its
$210.0 million senior secured term facility and $50.0 million
senior secured revolving facility. As a result, the Company
recognized additional interest expense of $3.0 million during the
2015 fourth quarter. The terms of the refinancing included a
lower interest rate, which the Company expects will reduce annual
interest expense by approximately $1.0 million. In addition,
the new loan facility enhances the Company’s capital structure
flexibility, provides better currency matching and improves
covenant coverage.
Fourth quarter 2015 Adjusted EBITDA was $23.7
million, down only $0.4 million compared to $24.1 million the prior
quarter despite $7.3 million lower net sales. Adjusted EBITDA
margin for the 2015 fourth quarter grew to 13.0%, from 12.8% the
prior quarter. Third quarter and fourth quarter 2015 Adjusted
EBITDA included foreign exchange losses of $1.7 million and $0.7
million, respectively, associated with the re-measurement of
intra-company balances and derivative foreign currency forward
contracts, and excluded $4.8 million and $0.6 million,
respectively, in non-cash pension settlement charges.
Adjusted EBITDA is a non-GAAP financial measure. Attached is
a reconciliation of Adjusted EBITDA to GAAP financial measures and
a description of Adjusted EBITDA.
Full year 2015 Adjusted EBITDA was $103.6
million, or 13.3% of net sales, up from $92.3 million, or 11.0% of
net sales the prior year. Full year 2015 Adjusted EBITDA
included a foreign exchange gain of $7.2 million associated with
the re-measurement of intra-company balances and derivative foreign
currency forward contracts and excluded $5.4 million in non-cash
pension settlement charges. Full year 2014 Adjusted EBITDA
included a $3.4 million foreign exchange gains associated with the
re-measurement of intra-company balances and excluded a $3.1
million non-cash pension settlement charge. Please see the
reconciliation of Adjusted EBITDA to GAAP financial measures in the
attached financial tables.
Forward Looking Statements
Certain matters discussed in this news release
are forward-looking statements, including that annual interest
expense is expected to be approximately $1.0 million lower due to
the partial debt refinancing. Such statements involve certain
risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements.
Potential risks and uncertainties include interest rate
fluctuations and other risks described in the Company's filings
with the Securities and Exchange Commission. These
forward-looking statements represent the Company's judgment as of
the date of this release. The Company disclaims, however, any
intent or obligation to update these forward-looking
statements.
Conference Call
SunEdison Semiconductor will host a conference
call tomorrow, March 9, 2016, at 9:00 a.m. ET to discuss the
Company’s fourth quarter and full year 2015 results. A live
webcast will be available on the Company’s web site at
www.sunedisonsemi.com. Interested investors should go to the
Company's web site at least fifteen minutes prior to the call to
register and download any necessary audio software.
A replay of the conference call will be
available from 10:30 a.m. ET on March 9, 2016, until 11:59 p.m. ET
on March 23, 2016. To access the replay, please dial (320)
365-3844 at any time during that period, using passcode 386914.
A replay will also be available on the Company’s web site at
www.sunedisonsemi.com.
About SunEdison
Semiconductor
SunEdison Semiconductor is a global leader in
the manufacture and sale of silicon wafers to the semiconductor
industry. For over 55 years, SunEdison Semiconductor has been
a pioneer in the design and development of silicon wafer
technologies. With R&D and manufacturing facilities in the
U.S., Europe, and Asia, SunEdison Semiconductor enables the next
generation of high performance semiconductor devices. SunEdison
Semiconductor’s common stock is listed on the NASDAQ OMX Global
Select Market under the symbol "SEMI." For more information
about SunEdison Semiconductor, please visit
www.sunedisonsemi.com.
-tables to follow-
SUNEDISON SEMICONDUCTOR LIMITED AND
SUBSIDIARIES |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In millions, except per share
data) |
|
|
Three Months Ended |
|
Year Ended |
|
December 31, 2015 |
|
September 30, 2015 |
|
December 31, 2014 |
|
December 31, 2015 |
|
December 31, 2014 |
Net sales to
non-affiliates |
$ |
181.7 |
|
|
$ |
189.0 |
|
|
$ |
204.9 |
|
|
$ |
776.7 |
|
|
$ |
837.7 |
|
Net sales to
affiliates |
— |
|
|
— |
|
|
1.0 |
|
|
0.8 |
|
|
2.4 |
|
Cost of goods sold |
166.6 |
|
|
167.7 |
|
|
182.4 |
|
|
700.4 |
|
|
761.1 |
|
Gross profit |
15.1 |
|
|
21.3 |
|
|
23.5 |
|
|
77.1 |
|
|
79.0 |
|
Operating expenses
(income): |
|
|
|
|
|
|
|
|
|
Marketing and administration |
18.3 |
|
|
21.1 |
|
|
21.1 |
|
|
81.3 |
|
|
84.8 |
|
Research and development |
6.4 |
|
|
8.4 |
|
|
8.4 |
|
|
30.2 |
|
|
34.8 |
|
Restructuring charges
(reversals) |
3.1 |
|
|
3.9 |
|
|
(8.4 |
) |
|
6.8 |
|
|
(22.9 |
) |
Loss on sale / receipt of property,
plant, and equipment |
— |
|
|
— |
|
|
4.7 |
|
|
— |
|
|
4.7 |
|
Long-lived asset impairment
charges |
2.7 |
|
|
56.7 |
|
|
1.4 |
|
|
60.7 |
|
|
59.4 |
|
Operating (loss)
income |
(15.4 |
) |
|
(68.8 |
) |
|
(3.7 |
) |
|
(101.9 |
) |
|
(81.8 |
) |
Non-operating expenses
(income): |
|
|
|
|
|
|
|
|
|
Interest expense |
7.5 |
|
|
3.6 |
|
|
3.7 |
|
|
18.2 |
|
|
9.2 |
|
Interest income |
(0.1 |
) |
|
(0.1 |
) |
|
(0.1 |
) |
|
(0.4 |
) |
|
(0.5 |
) |
Interest, net - affiliates |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.1 |
) |
Other, net |
(0.9 |
) |
|
0.3 |
|
|
(2.0 |
) |
|
(9.8 |
) |
|
(2.6 |
) |
Total non-operating
expense |
6.5 |
|
|
3.8 |
|
|
1.6 |
|
|
8.0 |
|
|
6.0 |
|
Loss before income tax expense |
(21.9 |
) |
|
(72.6 |
) |
|
(5.3 |
) |
|
(109.9 |
) |
|
(87.8 |
) |
Income tax expense |
9.9 |
|
|
7.8 |
|
|
4.9 |
|
|
26.1 |
|
|
2.6 |
|
Loss before equity in income (loss)
of equity method investments |
(31.8 |
) |
|
(80.4 |
) |
|
(10.2 |
) |
|
(136.0 |
) |
|
(90.4 |
) |
Equity in income (loss)
of equity method investments, net of tax |
0.7 |
|
|
(0.4 |
) |
|
(0.3 |
) |
|
(0.7 |
) |
|
(0.6 |
) |
Net loss |
(31.1 |
) |
|
(80.8 |
) |
|
(10.5 |
) |
|
(136.7 |
) |
|
(91.0 |
) |
Net loss attributable
to noncontrolling interests |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.8 |
|
Net loss attributable
to SunEdison Semiconductor Limited shareholders |
$ |
(31.1 |
) |
|
$ |
(80.8 |
) |
|
$ |
(10.5 |
) |
|
$ |
(136.7 |
) |
|
$ |
(90.2 |
) |
Basic loss per
share |
$ |
(0.74 |
) |
|
$ |
(1.93 |
) |
|
$ |
(0.25 |
) |
|
$ |
(3.28 |
) |
|
$ |
(2.17 |
) |
Diluted loss per
share |
$ |
(0.74 |
) |
|
$ |
(1.93 |
) |
|
$ |
(0.25 |
) |
|
$ |
(3.28 |
) |
|
$ |
(2.17 |
) |
Weighted-average shares
used in computing basic loss per share |
42.0 |
|
|
41.9 |
|
|
41.5 |
|
|
41.7 |
|
|
41.5 |
|
Weighted-average shares
used in computing diluted loss per share |
42.0 |
|
|
41.9 |
|
|
41.5 |
|
|
41.7 |
|
|
41.5 |
|
SUNEDISON
SEMICONDUCTOR LIMITED AND SUBSIDIARIES |
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In
millions) |
|
|
December 31, 2015 |
|
December 31, 2014 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
83.5 |
|
|
$ |
88.2 |
|
Accounts receivable, affiliate |
— |
|
|
4.3 |
|
Accounts receivable, net |
85.8 |
|
|
98.6 |
|
Inventories |
109.3 |
|
|
122.1 |
|
Deferred tax asset |
— |
|
|
27.3 |
|
Prepaid and other current
assets |
31.2 |
|
|
28.3 |
|
Total current assets |
309.8 |
|
|
368.8 |
|
Property, plant, and
equipment, net |
530.8 |
|
|
598.8 |
|
Investments |
121.9 |
|
|
130.6 |
|
Other assets |
86.5 |
|
|
77.6 |
|
Total assets |
$ |
1,049.0 |
|
|
$ |
1,175.8 |
|
|
|
|
|
Liabilities and
Equity |
|
|
|
Current liabilities: |
|
|
|
Current portion, long-term
debt |
$ |
6.7 |
|
|
$ |
2.1 |
|
Short-term borrowings |
6.6 |
|
|
— |
|
Accounts payable, affiliate |
— |
|
|
9.4 |
|
Accounts payable |
116.5 |
|
|
94.6 |
|
Deposit for investment
distribution |
35.0 |
|
|
— |
|
Accrued liabilities |
46.4 |
|
|
57.6 |
|
Accrued wages and salaries |
21.1 |
|
|
23.6 |
|
Restructuring liabilities |
9.1 |
|
|
14.0 |
|
Total current liabilities |
241.4 |
|
|
201.3 |
|
Long-term debt, less
current portion |
191.9 |
|
|
196.6 |
|
Pension and
post-employment liabilities |
51.9 |
|
|
54.7 |
|
Restructuring
liabilities |
3.5 |
|
|
3.9 |
|
Other liabilities |
22.2 |
|
|
27.8 |
|
Total liabilities |
510.9 |
|
|
484.3 |
|
|
|
|
|
Shareholders' equity: |
|
|
|
Ordinary shares |
957.2 |
|
|
943.1 |
|
Accumulated deficit |
(215.4 |
) |
|
(78.7 |
) |
Accumulated other comprehensive
loss |
(204.9 |
) |
|
(174.1 |
) |
Total SunEdison Semiconductor
Limited shareholders' equity |
536.9 |
|
|
690.3 |
|
Noncontrolling
interests |
1.2 |
|
|
1.2 |
|
Total shareholders' equity |
538.1 |
|
|
691.5 |
|
Total liabilities and shareholders'
equity |
$ |
1,049.0 |
|
|
$ |
1,175.8 |
|
SUNEDISON
SEMICONDUCTOR LIMITED AND SUBSIDIARIES |
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In
millions) |
|
|
Three Months Ended |
|
Year Ended |
|
December 31, 2015 |
|
September 30, 2015 |
|
December 31, 2014 |
|
December 31, 2015 |
|
December 31, 2014 |
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(31.1 |
) |
|
$ |
(80.8 |
) |
|
$ |
(10.5 |
) |
|
$ |
(136.7 |
) |
|
$ |
(91.0 |
) |
Adjustments to reconcile net loss
to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
29.6 |
|
|
24.4 |
|
|
|
28.6 |
|
|
111.5 |
|
|
116.0 |
|
Long lived asset impairment
charges |
2.7 |
|
|
56.7 |
|
|
|
1.4 |
|
|
60.7 |
|
|
59.4 |
|
Loss on sale / receipt of property,
plant, and equipment |
— |
|
|
— |
|
|
|
4.7 |
|
|
— |
|
|
4.7 |
|
Stock-based compensation |
4.1 |
|
|
4.1 |
|
|
|
4.0 |
|
|
15.2 |
|
|
11.3 |
|
Provision for deferred taxes
(benefit) |
4.7 |
|
|
1.1 |
|
|
|
5.3 |
|
|
9.8 |
|
|
(26.6 |
) |
Other |
(2.9 |
) |
|
(1.2 |
) |
|
|
0.2 |
|
|
(3.6 |
) |
|
(2.3 |
) |
Changes in operating assets and
liabilities: |
|
|
|
|
|
|
|
|
|
Accounts
receivable |
14.6 |
|
|
17.9 |
|
|
|
5.1 |
|
|
22.9 |
|
|
(1.6 |
) |
Inventories |
(6.7 |
) |
|
0.3 |
|
|
|
4.1 |
|
|
8.4 |
|
|
(3.4 |
) |
Accounts
receivable, affiliate |
— |
|
|
— |
|
|
|
3.8 |
|
|
(8.0 |
) |
|
(2.3 |
) |
Accounts
payable, affiliate |
— |
|
|
— |
|
|
|
(0.8 |
) |
|
12.4 |
|
|
(53.7 |
) |
Prepaid and
other current assets |
(0.1 |
) |
|
(1.9 |
) |
|
|
(0.8 |
) |
|
(3.4 |
) |
|
(6.4 |
) |
Accounts
payable and accrued liabilities |
5.0 |
|
|
(20.2 |
) |
|
|
(5.1 |
) |
|
(0.4 |
) |
|
7.3 |
|
Income taxes
payable |
(3.0 |
) |
|
3.0 |
|
|
|
(17.6 |
) |
|
0.4 |
|
|
(8.0 |
) |
Pension and
post-employment liabilities |
1.2 |
|
|
3.9 |
|
|
|
(0.5 |
) |
|
4.6 |
|
|
(4.7 |
) |
Restructuring
liabilities |
0.8 |
|
|
1.4 |
|
|
|
(13.0 |
) |
|
(4.1 |
) |
|
(34.9 |
) |
Other |
2.9 |
|
|
(0.3 |
) |
|
|
0.0 |
|
|
(11.4 |
) |
|
(14.1 |
) |
Net cash provided by (used in)
operating activities |
21.8 |
|
|
8.4 |
|
|
|
8.9 |
|
|
78.3 |
|
|
(50.3 |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Capital expenditures |
(23.5 |
) |
|
(29.9 |
) |
|
|
(23.1 |
) |
|
(106.3 |
) |
|
(94.4 |
) |
Notes receivable from
affiliates |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.0 |
|
Disbursements made for notes
receivable |
— |
|
|
— |
|
|
— |
|
|
(9.1 |
) |
|
— |
|
Proceeds from deposit for
investment distribution |
— |
|
|
35.0 |
|
|
|
|
35.0 |
|
|
— |
|
Other |
(2.6 |
) |
|
— |
|
|
|
1.6 |
|
|
(2.6 |
) |
|
(1.3 |
) |
Net cash (used in) provided by
investing activities |
(26.1 |
) |
|
5.1 |
|
|
|
(21.5 |
) |
|
(83.0 |
) |
|
(92.7 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Principal payments on long-term
debt |
(40.4 |
) |
|
(0.6 |
) |
|
|
(0.5 |
) |
|
(42.0 |
) |
|
(11.6 |
) |
Proceeds from long-term debt |
38.5 |
|
|
— |
|
|
— |
|
|
38.5 |
|
|
210.0 |
|
Change in ordinary shares |
(0.1 |
) |
|
(0.1 |
) |
|
— |
|
|
(1.1 |
) |
|
— |
|
Net principal payments on
short-term borrowings |
(0.1 |
) |
|
(0.6 |
) |
|
— |
|
|
(0.7 |
) |
|
— |
|
Proceeds from short-term
borrowings |
— |
|
|
— |
|
|
— |
|
|
7.6 |
|
|
— |
|
Deferred financing costs and
original issuance discount |
(0.4 |
) |
|
— |
|
|
|
(0.2 |
) |
|
(0.4 |
) |
|
(12.1 |
) |
Net Parent investment |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(179.4 |
) |
Proceeds from issuance of ordinary
shares |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
186.3 |
|
Net cash (used in) provided by
financing activities |
(2.5 |
) |
|
(1.3 |
) |
|
|
(0.7 |
) |
|
1.9 |
|
|
193.2 |
|
Effect of exchange rate changes on cash and cash
equivalents |
(0.5 |
) |
|
— |
|
|
|
(1.6 |
) |
|
(1.9 |
) |
|
(2.8 |
) |
Net (decrease) increase in cash and
cash equivalents |
(7.3 |
) |
|
12.2 |
|
|
|
(14.9 |
) |
|
(4.7 |
) |
|
47.4 |
|
Cash and cash equivalents at beginning of
period |
90.8 |
|
|
78.6 |
|
|
|
103.1 |
|
|
88.2 |
|
|
40.8 |
|
Cash and cash equivalents at end of period |
$ |
83.5 |
|
|
$ |
90.8 |
|
|
$ |
88.2 |
|
|
$ |
83.5 |
|
|
$ |
88.2 |
|
SUNEDISON
SEMICONDUCTOR LIMITED AND SUBSIDIARIES |
UNAUDITED
SUPPLEMENTAL INFORMATION |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE |
(In
millions) |
|
ADJUSTED EBITDA CALCULATION
[*] |
|
|
Three Months Ended |
|
Year Ended |
|
December 31,
2015 |
|
September
30, 2015 |
|
December 31, 2014 |
|
December 31, 2015 |
|
December 31, 2014 |
Net loss attributable
to SunEdison Semiconductor Limited shareholders |
$ |
(31.1 |
) |
|
$ |
(80.8 |
) |
|
$ |
(10.5 |
) |
|
$ |
(136.7 |
) |
|
$ |
(90.2 |
) |
Interest, net |
7.4 |
|
|
3.5 |
|
|
3.6 |
|
|
17.8 |
|
|
8.6 |
|
Income tax expense |
9.9 |
|
|
7.8 |
|
|
4.9 |
|
|
26.1 |
|
|
2.6 |
|
Depreciation and amortization |
27.3 |
|
|
23.7 |
|
|
28.0 |
|
|
107.2 |
|
|
114.8 |
|
Restructuring charges (reversals)
and other non-recurring items (1) |
3.5 |
|
|
3.9 |
|
|
(8.4 |
) |
|
7.2 |
|
|
(22.6 |
) |
Loss on sale of property, plant,
and equipment |
— |
|
|
— |
|
|
4.7 |
|
|
— |
|
|
4.7 |
|
Long-lived asset impairment
charges |
2.7 |
|
|
56.7 |
|
|
1.4 |
|
|
60.7 |
|
|
59.4 |
|
Stock compensation expense |
4.1 |
|
|
|
4.1 |
|
|
4.0 |
|
|
15.2 |
|
|
11.3 |
|
Pension settlement charge (2) |
0.6 |
|
|
4.8 |
|
|
3.1 |
|
|
5.4 |
|
|
3.1 |
|
Equity in (income) loss of equity
method investments |
(0.7 |
) |
|
0.4 |
|
|
0.3 |
|
|
0.7 |
|
|
0.6 |
|
Adjusted EBITDA [*] |
$ |
23.7 |
|
|
$ |
24.1 |
|
|
$ |
31.1 |
|
|
$ |
103.6 |
|
|
$ |
92.3 |
|
(1) For the three months and year ended December 31, 2015, we
recognized approximately $0.4 million of securities transaction tax
related to the disposition of approximately 21% investment interest
in SMP, Ltd to our subsidiary. For the year ended December
31, 2014, we recognized approximately $0.3 million of securities
transaction tax related to the acquisition of approximately 35%
investment interest in SMP, Ltd. This is a non-recurring
expense that is excluded from Adjusted EBITDA as we do not consider
this to be useful in assessing our on-going operating
performance.
(2) For the three month periods ended December 31, 2015,
September 30, 2015, and December 31, 2014, we recognized
approximately $0.6 million, $4.8 million, and $3.1 million,
respectively, in interim lump-sum pension settlement charges
related to our U.S. pension plan. Pension lump-sum settlement
charges is a non-cash expense that is excluded from Adjusted EBITDA
as we do not consider this to be useful in assessing our on-going
operating performance.
[*] Adjusted EBITDA is a non-GAAP
financial measure. This measurement should not be viewed as an
alternative to GAAP measures of performance. The presentation of
Adjusted EBITDA should not be construed as an inference that our
future results will be unaffected by unusual or non-recurring
items.
We define Adjusted EBITDA as earnings before net interest
expense; income tax expense (benefit); depreciation and
amortization; restructuring charges (reversals); non-recurring
items; loss on sale of property, plant, and equipment; long-lived
asset impairment charges; pension settlement charges; stock
compensation expense; and equity in loss of equity method
investments. All of the omitted items are either (i) non-cash items
or (ii) items that we do not consider in assessing our on-going
operating performance. Because it omits non-cash items, we feel
that Adjusted EBITDA is less susceptible to variances in actual
performance resulting from depreciation, amortization and other
non-cash charges and more reflective of other factors that affect
our operating performance. Because it omits the other items, we
believe Adjusted EBITDA is also more reflective of our on-going
operating performance. We believe Adjusted EBITDA is useful to
investors in evaluating our operating performance because:
- securities analysts and other interested parties use such
calculations as a measure of financial performance and debt service
capabilities, and
- it is used by our management for internal planning purposes,
including aspects of our operating budget and capital
expenditures.
Adjusted EBITDA has limitations as an analytical tool, and it
should not be considered in isolation or as a substitute for
analysis of our results as reported under GAAP. Some of these
limitations include:
- it does not reflect our cash expenditures or future
requirements for capital expenditures or contractual
commitments,
- it does not reflect changes in, or cash requirements for,
working capital,
- it does not reflect interest expense or the cash requirements
necessary to service interest or principal payments on our
outstanding debt,
- it does not reflect payments made or future requirements for
income taxes,
- it adjusts for restructuring charges (reversals), non-recurring
items, loss on sale of property, plant, and equipment, long-lived
asset impairments, and pension settlement charges which are factors
that we do not consider indicative of future performance,
- it adjusts for non-cash stock compensation expense and equity
in loss of equity method investments to more clearly reflect
comparable period-over-period cash operating performance,
- although it reflects adjustments for factors that we do not
consider indicative of future performance, we may, in the future,
incur expenses similar to the adjustments reflected in our
calculation of Adjusted EBITDA, and
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced in the future and Adjusted EBITDA does not reflect cash
requirements for such replacements.
Investors are encouraged to evaluate each adjustment and the
reasons we consider it appropriate for supplemental analysis.
Investor & Media Contact
Chris Chaney
Director, Investor Relations & Corporate Communications
SunEdison Semiconductor Limited
cchaney@sunedisonsemi.com
+1 636 474 5226
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