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Shares of specialty semiconductor foundry Tower Semiconductor (NASDAQ: TSEM) surged on Monday after the company reported its first-quarter results. Tower beat analyst estimates for earnings, posted double-digit revenue growth, and produced record free cash flow, prompting investors to push the stock up 12.5% as of 11:38 a.m. EDT.
Tower reported first-quarter revenue of $330 million, up 19% year over year and in line with the average analyst estimate. CEO Russell Ellwanger commented on the drivers of this growth:
Image source: Tower Semiconductor.
Non-GAAP EPS came in at $0.49, up from $0.31 in the prior-year period and $0.06 better than analysts were expecting. Gross margin surged to 26%, up from 22% in the first quarter of 2016. Operating margin jumped to 15%, compared to 11% one year ago. Free cash flow for the quarter totaled $42 million, a record for the company.
Tower expects growth to slow a bit during the second quarter. The company's guidance calls for second-quarter revenue of $345 million, a 13% year-over-year increase. Earnings guidance wasn't provided in the company's earnings press release.
Tower put up a solid quarter, with growth in high-margin businesses pushing up margins and profits. Whether those high margins are sustainable is an open question.
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