ASE Technology (ASX) Q3 2018 earnings summary

Executive summary

• Pro forma revenue was NT$107,597 million, up 17% QoQ and 12% YoY; gross profit rose 25% QoQ and 5% YoY, while operating income was flat YoY.

• Legal-entity revenue rose 46% YoY; Q3 was the first full quarter of combined operations after the April 30 merger, limiting period comparability.

• Pro forma net profit was NT$7,715 million and basic EPS NT$1.81, excluding PPA expenses and disposal gain.

Financial highlights

• Legal-entity gross profit was NT$18,381 million, operating income NT$8,372 million, and gross and operating margins were 17.1% and 7.8%.

• Parent-attributable net income was NT$6,257 million, down 1% YoY; basic and diluted EPS were NT$1.47 and NT$1.43.

• Pro forma gross margin was 17.1%, up 1.0 percentage point QoQ and down 1.1 points YoY; operating margin improved 1.6 points QoQ and declined 0.9 points YoY.

• Q3 EBITDA was NT$21,579 million, down 13% QoQ and up 42% YoY on the legal-entity comparison.

Outlook and guidance

• Q4 ATM business in USD terms was projected to be similar to Q2, with gross margin near Q3 levels; revenue was guided roughly 4% lower QoQ.

• Q4 EMS sequential growth was expected to be slightly below Q3; operating margin was expected near Q3 levels, while higher material content could weigh on gross margin.

• Q4 utilization was expected near 80% for wire bond and advanced packaging and above 70% for test.