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KULICKE & SOFFA REPORTS THIRD QUARTER 2017 RESULTS

Kulicke & Soffa Reports Third Quarter 2017 Results

August 2, 2017 at 6:55 AM EDT

 

Delivers Strong Profitability and Outlook

SINGAPORE--(BUSINESS WIRE)-- Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) ("Kulicke & Soffa", "K&S" or the "Company") today announced results for its third fiscal quarter ended July 1, 2017. The Company reported third quarter net revenue of $243.9 million and a diluted EPS of $0.43. The adjusted non-GAAP diluted EPS was $0.62 after exclusion of a unique charge and favorable tax credit as detailed below.

 
Quarterly Results
     

Fiscal Q3 2017

    Change vs.

Fiscal Q3 2016

    Change vs.

Fiscal Q2 2017

Net Revenue     $243.9 million     up 12.7%     up 22.2%
Gross Profit     $111.7 million     up 11.7%     up 23.7%
Gross Margin     45.8%     down 40 bps     up 60 bps
Income from Operations     $11.5 million     down 70.3%     down 64.8%
Operating Margin     4.7%     down 1310 bps     down 1160 bps
Net Income     $30.8 million     down 3.1%     up 6.1%
Net Margin     12.6%     down 210 bps     down 190 bps
EPS - Diluted     $0.43     down 4.4%     up 7.5%
                   

Dr. Fusen Chen, Kulicke & Soffa's President and Chief Executive Officer, stated, "We continue to benefit from the strong industry environment, improved market dynamics and new opportunities in our core business and expanding portfolio. In parallel, we remain focused on further enhancing exposure and alignment to several other meaningful near and long-term opportunities."

During the June quarter the Company incurred a one-time, non-cash impairment charge of $35.2 million as well as a favorable foreign tax credit of $20.9 million. Excluding this unique charge and credit resulted in an adjusted non-GAAP net income of $45.1 million and diluted EPS of $0.62.

Third Quarter Fiscal 2017 Key Product Trends

  • Ball bonder equipment net revenue increased by 19.0% over the March quarter.
  • Wedge bonder equipment net revenue decreased by 5.9% over the strong March quarter.

Third Quarter Fiscal 2017 Financial Highlights

  • Net revenue of $243.9 million.
  • Gross margin of 45.8%.
  • Net income of $30.8 million or $0.43 per share.
  • Cash, cash equivalents, restricted cash and short-term investments were $593.9 million as of July 1, 2017.

Fourth Quarter Fiscal 2017 Outlook

The Company currently expects net revenue in the fourth fiscal quarter of 2017 ending September 30, 2017 to be approximately $200 million to $215 million, a 42% improvement over the same period in the prior year.

Looking forward, Dr. Fusen Chen commented, "As we aggressively work toward optimizing our existing businesses, accomplishing our development goals and executing on existing and new growth initiatives, such as the recent Liteq acquisition, we anticipate fundamental enhancements to our value proposition."

K&S anticipates revenue for its full fiscal year 2017 to fall between $793 million and $808 million, an approximately 28% improvement over the prior fiscal year.

Earnings Conference Call Details

A conference call to discuss these results will be held today, August 2, 2017, beginning at 8:00 am (EDT). To access the conference call, interested parties may call +1-877-407-8037 or internationally +1-201-689-8037. The call will also be available by live webcast at investor.kns.com.

A replay will be available from approximately one hour after the completion of the call through August 9, 2017 by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13666382. A webcast replay will also be available at investor.kns.com.

About Kulicke & Soffa

Kulicke & Soffa (NASDAQ: KLIC) is a leading provider of semiconductor packaging and electronic assembly solutions supporting the global automotive, consumer, communications, computing and industrial segments. As a pioneer in the semiconductor space, K&S has provided customers with market leading packaging solutions for decades. In recent years, K&S has expanded its product offerings through strategic acquisitions and organic development, adding advanced packaging, electronics assembly, wedge bonding and a broader range of expendable tools to its core offerings. Combined with its extensive expertise in process technology and focus on development, K&S is well positioned to help customers meet the challenges of packaging and assembling the next-generation of electronic devices (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 revenue, sustained, increasing, continuing or strengthening demand for our products, replacement demand, our research and development efforts, our ability to control costs, and our ability to identify and realize new growth opportunities within segments, such as automotive and industrial as well as surrounding technology adoption such as system in package and advanced packaging techniques. 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 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; and the factors listed or discussed in Kulicke and Soffa Industries, Inc. 2016 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     Nine months ended
      July 1, 2017     July 2, 2016     July 1, 2017     July 2, 2016
Net revenue     $ 243,897       $ 216,414       $ 593,149       $ 481,348  
Cost of sales       132,199         116,374         322,842         261,240  
Gross profit       111,698         100,040         270,307         220,108  
                         
Operating expenses:                        
Selling, general and administrative       35,356         36,776         94,398         94,928  
Research and development       25,980         22,960         72,505         69,593  
Impairment charges       35,207                 35,207          
Amortization of intangible assets       1,521         1,665         4,565         4,996  
Restructuring       2,170         17         2,282         1,965  
Total operating expenses       100,234         61,418         208,957         171,482  
Income from operations       11,464         38,622         61,350         48,626  
Other income (expense):                        
Interest income       1,751         972         4,502         2,295  
Interest expense       (264 )       (290 )       (787 )       (839 )
Income before income taxes       12,951         39,304         65,065         50,082  
Income tax (benefit) expense       (17,867 )       7,519         (10,377 )       13,299  
Share of results of equity-method investee, net of tax       7                 7          
Net income     $ 30,811       $ 31,785       $ 75,435       $ 36,783  
                         
Net income per share:                        
Basic     $ 0.43       $ 0.45       $ 1.06       $ 0.52  
Diluted     $ 0.43       $ 0.45       $ 1.05       $ 0.52  
                         
Weighted average shares outstanding:                        
Basic       71,063         70,379         70,960         70,502  
Diluted       72,483         70,843         72,169         70,802  
             
             
      Three months ended     Nine months ended
Supplemental financial data:     July 1, 2017     July 2, 2016     July 1, 2017     July 2, 2016
Depreciation and amortization     $ 3,964       $ 4,019       $ 11,739       $ 12,221  
Capital expenditures       3,803         1,480         21,909         4,396  
Equity-based compensation expense:                        
Cost of sales       97         98         344         323  
Selling, general and administrative       2,179         1,331         7,363         2,021  
Research and development       514         472         1,763         1,592  
Total equity-based compensation expense     $ 2,790       $ 1,901       $ 9,470       $ 3,936  
       
       
      As of
      July 1, 2017     July 2, 2016
Backlog of orders 1     $ 198,592       $ 82,976  
Number of employees       3,299         2,743  
                     
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
      July 1, 2017     October 1, 2016

ASSETS

CURRENT ASSETS

           
Cash and cash equivalents     $ 455,357       $ 423,907  
Restricted cash       28,572          
Short-term investments       110,000         124,000  
Accounts and other receivable, net of allowance for doubtful accounts of $82 and $506 respectively       214,147         130,455  
Inventories, net       126,382         87,295  
Prepaid expenses and other current assets       25,027         15,285  

TOTAL CURRENT ASSETS

      959,485         780,942  
             
Property, plant and equipment, net       66,233         50,342  
Goodwill       46,065         81,272  
Intangible assets, net       46,244         50,810  
Deferred income taxes       27,593         16,822  
Equity investments       1,305          
Other assets       1,991         2,256  
TOTAL ASSETS     $ 1,148,916       $ 982,444  
             
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES            
Accounts payable     $ 87,151       $ 41,813  
Accrued expenses and other current liabilities       101,261         63,954  
Income taxes payable       10,181         12,830  
TOTAL CURRENT LIABILITIES       198,593         118,597  
             
Financing obligation       16,031         16,701  
Deferred income taxes       32,324         27,697  
Other liabilities       14,197         12,931  
TOTAL LIABILITIES       261,145         175,926  
             
SHAREHOLDERS' EQUITY            
Common stock, no par value       504,155         498,676  
Treasury stock, at cost       (139,594 )       (139,407 )
Retained earnings       525,410         449,975  
Accumulated other comprehensive loss       (2,200 )       (2,726 )
TOTAL SHAREHOLDERS' EQUITY       887,771         806,518  
             
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY     $ 1,148,916       $ 982,444  
                     
             

KULICKE & SOFFA INDUSTRIES, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

             
      Three months ended     Nine months ended
      July 1, 2017     July 2, 2016     July 1, 2017     July 2, 2016
Net cash provided by operating activities     $ 25,188       $ 35,437       $ 68,166       $ 34,458  
Net cash used in investing activities, continuing operations       (4,185 )       (1,847 )       (36,584 )       (3,639 )
Net cash provided used in financing activities, continuing operations       (162 )       (102 )       (805 )       (14,195 )
Effect of exchange rate changes on cash and cash equivalents       (687 )       647         673         890  
Changes in cash and cash equivalents       20,154         34,135         31,450         17,514  
Cash and cash equivalents, beginning of period       435,203         481,993         423,907         498,614  
Cash and cash equivalents, end of period     $ 455,357       $ 516,128       $ 455,357       $ 516,128  
                         
Restricted cash       28,572                 28,572          
Short-term investments       110,000                 110,000          
Total cash, cash equivalents, restricted cash and short-term investments       593,929         516,128         593,929         516,128  
                                 

 

Kulicke & Soffa Industries, Inc.
Joseph Elgindy
Investor Relations & Strategic Initiatives
P: +1-215-784-7518
F: +1-215-784-6180

 

Source: Kulicke & Soffa Industries, Inc.

 

 

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