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Kulicke & Soffa Reports First Quarter 2020 Results

January 30, 2020 GMT

SINGAPORE--(BUSINESS WIRE)--Jan 29, 2020--

Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) (“Kulicke & Soffa”, “K&S” or the “Company”), today announced financial results of its first fiscal quarter ended December 28, 2019. The Company reported first quarter net revenue of $144.3 million, net income of $13.5 million and non-GAAP net income of $15.7 million.

 

Quarterly Results - U.S. GAAP

 

 

Fiscal Q1 2020

 

Change vs.

Fiscal Q1 2019

Change vs.

Fiscal Q4 2019

Net Revenue

 

$144.3 million

 

down 8.2%

up 3.2%

Gross Profit

 

$70.4 million

 

down 5.9%

up 7.6%

Gross Margin

 

48.8%

 

up 120 bps

up 200 bps

Income from Operations

 

$13.4 million

 

down 8.2%

up 74%

Operating Margin

 

9.3%

 

up 0 bps

up 380 bps

Net Income

 

$13.5 million

 

up 80%

up 110.9%

Net Margin

 

9.4%

 

up 460 bps

up 480 bps

EPS – Diluted (a)

 

$0.21

 

up 90.9%

up 110%

(a)

 

GAAP diluted net earnings per share reflects any dilutive effect of outstanding restricted stock units and stock options, but that effect is excluded when calculating GAAP diluted net (loss) per share because it would be anti-dilutive.

 

Quarterly Results - Non-GAAP

 

 

Fiscal Q1 2020

 

Change vs.

Fiscal Q1 2019

Change vs.

Fiscal Q4 2019

Income from Operations

 

$15.6 million

 

down 5.5%

up 39.3%

Operating Margin

 

10.8%

 

up 30 bps

up 280 bps

Net Income

 

$15.7 million

 

down 7.6%

up 68.8%

Net Margin

 

10.9%

 

up 10 bps

up 420 bps

EPS - Diluted

 

$0.24

 

down 4%

up 71.4%

 
A reconciliation of the GAAP and non-GAAP adjusted results is provided in the financial tables included in this release. See also “Use of non-GAAP Financial Results” section.

Dr. Fusen Chen, Kulicke & Soffa’s President and Chief Executive Officer, stated, “Although the December quarter is historically seasonally soft, demand for our advanced packaging, memory and automotive-focused solutions improved and provided for a sequential increase in net revenue. We continue to anticipate more aggressive capital spending in all of the markets we serve through fiscal year 2020.”

First Quarter Fiscal 2020 Financial Highlights

Second Quarter Fiscal 2020 Outlook

The Company currently expects net revenue in the second fiscal quarter of 2020 ending March 28, 2020 to be approximately $140 million to $170 million, representing a 7% sequential improvement.

Looking forward, Dr. Fusen Chen commented, “Over the past three years, our development investments have allowed us to become a true multi-product company. This effort has expanded our served available market, increased the diversification of our business and significantly enhances our ability to create and deliver shareholder value.”

Earnings Conference Call Details

A conference call to discuss these results will be held tomorrow, January 30, 2020, beginning at 8:00am EST. To access the conference call, interested parties may call +1-877-407-8037 or internationally +1-201-689-8037. A live webcast will also be available at investor.kns.com.

A replay will be available from approximately one hour after the completion of the call through August 6th by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13697293. A webcast replay will also be available at investor.kns.com.

Use of Non-GAAP Financial Results

In addition to U.S. GAAP results, this press release also contains non-GAAP financial results. The Company’s non-GAAP results exclude amortization related to intangible assets acquired through business combinations, goodwill impairment, costs associated with restructuring, income tax expense related to the Tax Cuts and Jobs Act of 2017 as well as tax benefits or expense associated with the foregoing non-GAAP items. These non-GAAP measures are consistent with the way management analyzes and assesses the Company’s operating results. The Company believes these non-GAAP measures enhance investors’ understanding of the Company’s underlying operational performance, as well as their ability to compare the Company’s period-to-period financial results and the Company’s overall performance to that of its competitors.

Management uses both U.S. GAAP metrics as well as non-GAAP operating income, operating margin, net income, net margin and net income per diluted share to evaluate the Company’s operating and financial results. Non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in the Company’s industry, as other companies in the industry may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on the Company’s reported financial results. The presentation of non-GAAP items is meant to supplement, but not substitute for, GAAP financial measures or information. The Company believes the presentation of non-GAAP results in combination with GAAP results provides better transparency to the investment community when analyzing business trends, providing meaningful comparisons with prior period performance and enhancing investors’ ability to view the Company’s results from management’s perspective. A reconciliation of each available GAAP to non-GAAP financial measure discussed in this press release is contained in the attached exhibit.

About Kulicke & Soffa

Kulicke & Soffa (NASDAQ: KLIC) is a leading provider of semiconductor and electronic assembly solutions serving the global automotive, consumer, communications, computing and industrial markets. Founded in 1951, K&S prides itself on establishing foundations for technological advancement - creating pioneering interconnect solutions that enable performance improvements, power efficiency, form-factor reductions and assembly excellence of current and next-generation semiconductor devices.

Leveraging decades of development proficiency and extensive process technology expertise, Kulicke & Soffa’s expanding portfolio provides equipment solutions, aftermarket products and services supporting a comprehensive set of interconnect technologies including wire bonding, advanced packaging, lithography, and electronics assembly. Dedicated to empowering technological discovery, always, K&S collaborates with customers and technology partners to push the boundaries of possibility, enabling a smarter future ( www.kns.com ).

Caution Concerning Results and Forward Looking Statements

In addition to historical statements, this press release contains statements relating to future events and our future results. These statements are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, and include, but are not limited to, statements that relate to our future expected dividend payouts and growth opportunities. While these forward-looking statements represent our judgments and future expectations concerning our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: the risk that the Company fails to meet its operational and financial targets in order to adhere to its dividend policy; the risk that customer orders already received may be postponed or canceled, generally without charges; the risk that anticipated customer orders may not materialize; the risk that our suppliers may not be able to meet our demands on a timely basis; the volatility in the demand for semiconductors and our products and services; the risk that identified market opportunities may not grow or developed as we anticipated; volatile global economic conditions, which could result in, among other things, sharply lower demand for products containing semiconductors and for the Company’s products, and disruption of capital and credit markets; the risk of failure to successfully manage our operations; the possibility that we may need to impair the carrying value of goodwill and/or intangibles established in connection with one or more of our prior acquisitions; acts of terrorism and violence; risks, such as changes in trade regulations, currency fluctuations, political instability and war, which may be associated with a substantial non-U.S. customer and supplier base and substantial non-U.S. manufacturing operations; the impact of changes in tax law; the risk that the Company will not identify suitable acquisition opportunities or that any acquisitions will not be successful; the risk that the Company fails to timely remediate the material weaknesses identified in the Company’s internal controls over financial reporting or that new material weaknesses or significant deficiencies emerge; and the factors listed or discussed in Kulicke and Soffa Industries, Inc. 2019 Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission. Kulicke and Soffa Industries, Inc. is under no obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

 

KULICKE & SOFFA INDUSTRIES, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except per share and employee data)

(Unaudited)

 

Three months ended

 

December 28, 2019

December 29, 2018

Net revenue

$

144,297

 

$

157,208

 

Cost of sales

 

73,933

 

 

82,409

 

Gross profit

 

70,364

 

 

74,799

 

 

 

 

Operating expenses:

 

 

Selling, general and administrative

 

26,424

 

 

28,533

 

Research and development

 

28,292

 

 

29,803

 

Amortization of intangible assets

 

1,817

 

 

1,877

 

Restructuring

 

417

 

 

31

 

Total operating expenses

 

56,950

 

 

60,244

 

Income from operations

 

13,414

 

 

14,555

 

Other income (expense):

 

 

Interest income

 

2,839

 

 

3,826

 

Interest expense

 

(583

)

 

(251

)

Income before income taxes

 

15,670

 

 

18,130

 

Income tax expense

 

2,133

 

 

10,570

 

Share of results of equity-method investee, net of tax

 

60

 

 

43

 

Net income

$

13,477

 

$

7,517

 

 

 

 

Net income per share:

 

 

Basic

$

0.21

 

$

0.11

 

Diluted

$

0.21

 

$

0.11

 

 

 

 

Cash dividends declared per share

$

0.12

 

$

0.12

 

 

 

 

Weighted average shares outstanding:

 

 

Basic

 

63,557

 

 

67,176

 

Diluted

 

64,139

 

 

67,851

 

 

 

Three months ended

Supplemental financial data:

December 28, 2019

December 29, 2018

Depreciation and amortization

$

4,759

 

$

4,769

 

Capital expenditures

 

2,325

 

 

4,942

 

Equity-based compensation expense:

 

 

Cost of sales

 

232

 

 

150

 

Selling, general and administrative

 

2,735

 

 

2,925

 

Research and development

 

642

 

 

798

 

Total equity-based compensation expense

$

3,609

 

$

3,873

 

 

 

As of

 

December 28, 2019

 

December 29, 2018

Backlog of orders 1

$

115,205

 

$

105,265

 

Number of employees

 

2,758

 

 

2,677

 

 
  1. Represents customer purchase commitments. While the Company believes these orders are firm, they are generally cancellable by customers without penalty.
 

KULICKE & SOFFA INDUSTRIES, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands)

(Unaudited)

 

As of

 

December 28, 2019

September 28, 2019

ASSETS

CURRENT ASSETS

 

 

Cash and cash equivalents

$

497,374

 

$

364,184

 

Short-term investments

 

119,000

 

 

229,000

 

Accounts and other receivable, net of allowance for doubtful accounts of $614 and $597, respectively

 

198,842

 

 

195,830

 

Inventories, net

 

95,209

 

 

89,308

 

Prepaid expenses and other current assets

 

16,182

 

 

15,429

 

TOTAL CURRENT ASSETS

 

926,607

 

 

893,751

 

 

 

 

Property, plant and equipment, net

 

56,826

 

 

72,370

 

Operating right-of-use assets

 

20,830

 

 

Goodwill

 

55,995

 

 

55,691

 

Intangible assets, net

 

41,728

 

 

42,651

 

Deferred tax assets

 

6,549

 

 

6,409

 

Equity investments

 

7,477

 

 

6,250

 

Other assets

 

2,070

 

 

2,494

 

TOTAL ASSETS

$

1,118,082

 

$

1,079,616

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

 

 

Short term debt

$

75,967

 

$

60,904

 

Accounts payable

 

44,903

 

 

36,711

 

Operating lease liabilities

 

5,427

 

 

Accrued expenses and other current liabilities

 

62,522

 

 

64,533

 

Income taxes payable

 

13,384

 

 

12,494

 

TOTAL CURRENT LIABILITIES

 

202,203

 

 

174,642

 

 

 

 

Financing obligation

 

 

14,207

 

Deferred income taxes

 

33,169

 

 

32,054

 

Income taxes payable

 

80,415

 

 

80,290

 

Operating lease liabilities

 

17,205

 

 

Other liabilities

 

9,437

 

 

9,360

 

TOTAL LIABILITIES

 

342,429

 

 

310,553

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

Common stock, no par value

 

529,487

 

 

533,590

 

Treasury stock, at cost

 

(346,869

)

 

(349,212

)

Retained earnings

 

599,682

 

 

594,625

 

Accumulated other comprehensive loss

 

(6,647

)

 

(9,940

)

TOTAL SHAREHOLDERS' EQUITY

$

775,653

 

$

769,063

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,118,082

 

$

1,079,616

 

 

 

KULICKE & SOFFA INDUSTRIES, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Three months ended

 

December 28, 2019

December 29, 2018

Net cash provided by operating activities

$

25,028

 

$

56,001

 

Net cash provided by/(used in) investing activities

 

106,487

 

 

(65,273

)

Net cash provided by/(used in) financing activities

 

2,152

 

 

(33,916

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(477

)

 

(18

)

Changes in cash, cash equivalents and restricted cash

 

133,190

 

 

(43,206

)

Cash, cash equivalents and restricted cash, beginning of period

 

364,184

 

 

321,148

 

Cash, cash equivalents and restricted cash, end of period

$

497,374

 

$

277,942

 

 

 

 

Short-term investments

 

119,000

 

 

355,000

 

Total cash, cash equivalents, restricted cash and short-term investments

$

616,374

 

$

632,942

 

 

Reconciliation of U.S. GAAP Income from Operating

to Non-GAAP Income from Operation and Operating Margin

(in thousands, except percentages)

(unaudited)

 

 

 

Three months ended

 

 

December 28, 2019

 

December 29, 2018

 

September 28, 2019

Net revenue

$

144,297

 

$

157,208

 

$

139,827

 

U.S. GAAP income from operations

 

13,414

 

 

14,555

 

 

7,693

 

U.S. GAAP operating margin

 

9.3

%

 

9.3

%

 

5.5

%

 

 

 

 

Pre-tax non-GAAP items:

 

 

 

Amortization related to intangible assets acquired through business combination- selling, general and administrative

 

1,817

 

 

1,877

 

 

1,823

 

Restructuring

 

417

 

 

31

 

 

1,639

 

Non-GAAP income from operations

$

15,648

 

$

16,463

 

$

11,155

 

Non-GAAP operating margin

 

10.8

%

 

10.5

%

 

8.0

%

 

Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income and

U.S. GAAP net income per share to Non-GAAP net income per share

(in thousands, except per share data)

(unaudited)

 

 

Three months ended

 

December 28, 2019

December 29, 2018

September 28, 2019

Net revenue

$

144,297

 

$

157,208

 

$

139,827

 

U.S. GAAP net income

 

13,477

 

 

7,517

 

 

6,404

 

U.S. GAAP net margin

 

9.3

%

 

4.8

%

 

4.6

%

 

 

 

 

Non-GAAP adjustments:

 

 

 

Amortization related to intangible assets acquired through business combination- selling, general and administrative

 

1,817

 

 

1,877

 

 

1,823

 

Restructuring

 

417

 

 

31

 

 

1,639

 

Income tax expense- Tax Reform

 

7,712

 

 

(300

)

Net income tax benefit on non-GAAP items

 

(51

)

 

(141

)

 

(250

)

Total non-GAAP adjustments

$

2,183

 

$

9,479

 

$

2,912

 

Non-GAAP net income

$

15,660

 

$

16,996

 

$

9,316

 

Non-GAAP net margin

 

10.9

%

 

10.8

%

 

6.7

%

 

 

 

 

U.S. GAAP net income per share:

 

 

 

Basic

 

0.21

 

 

0.11

 

 

0.10

 

Diluted (a)

 

0.21

 

 

0.11

 

 

0.10

 

 

 

 

 

Non-GAAP adjustments per share: (b)

 

 

 

Basic

 

0.03

 

 

0.14

 

 

0.05

 

Diluted

 

0.03

 

 

0.14

 

 

0.04

 

 

 

 

 

Non-GAAP net income per share:

 

 

 

Basic

$

0.24

 

$

0.25

 

$

0.15

 

Diluted (c)

$

0.24

 

$

0.25

 

$

0.14

 

 

 

 

 

(a)

GAAP diluted net earnings per share reflects any dilutive effect of outstanding restricted stock units and stock options, but that effect is excluded when calculating GAAP diluted net (loss) per share because it would be anti-dilutive.

(b)

Non-GAAP adjustments per share includes amortization related to intangible assets acquired through business combinations, costs associated with restructuring, income tax expense related to the Tax Cuts and Jobs Act of 2017 as well as tax benefits or expense associated with the foregoing non-GAAP items.

(c)

Non-GAAP diluted net earnings per share reflects any dilutive effect of outstanding restricted stock units and stock options.

 

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CONTACT: Kulicke & Soffa Industries, Inc.

Joseph Elgindy

Investor Relations & Strategic Initiatives

P: +1-215-784-7518

F: +1-215-784-6180

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