August 3, 2016

Kulicke & Soffa Reports Third Quarter 2016 Results

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 2, 2016.

 
Quarterly Results
   

Fiscal Q3 2016

  Change vs.

Fiscal Q3 2015

  Change vs.

Fiscal Q2 2016

Net Revenue   $216.4 million   up 31.5%   up 38.4%
Gross Profit   $100.0 million   up 29.0%   up 43.6%
Gross Margin   46.2%   down 90 bps   up 170 bps
Income from Operations $38.6 million up 140.1% up 229.8%
Operating Margin   17.8%   up 800 bps   up 1,030 bps
Net Income $31.8 million up 26.9% up 524.6%
Net Margin   14.7%   down 50 bps   up 1,140 bps
EPS - Diluted   $0.45   up 36.4%   up 542.9%
 

Jonathan Chou, Kulicke & Soffa's Interim Chief Executive Officer, Chief Financial Officer, stated, "The strong June quarter's results marked the second steep sequential increase in our business driven by meaningful ramps within our ball and wedge bonding businesses and continued strength within our advanced packaging offerings."

The Company also continues to gain traction with its new APAMA offerings, which support the next generation of advanced packaging technology. To date K&S has received three purchase orders for its APAMA advanced packaging solutions; during its third fiscal quarter the Company has recognized revenue for its second order.

Third Quarter Fiscal 2016 Key Product Trends

  • Ball bonder equipment net revenue increased 64.2% over the March quarter.
  • Wedge bonder equipment net revenue increased by 22.3% over the March quarter.
  • Advanced Packaging Mass Reflow equipment net revenue increased by 0.7% over the March quarter.

Third Quarter Fiscal 2016 Financial Highlights

  • Net revenue of $216.4 million.
  • Gross margin of 46.2%.
  • Net income of $31.8 million or $0.45 per share.
  • Cash and cash equivalents were $516.1 million as of July 2, 2016.
  • 7.9 million shares had been repurchased since the stock repurchase program's August 2014 initiation, equivalent to 10.1% of weighted average shares outstanding at the program's inception.

Fourth Quarter Fiscal 2016 Outlook

The Company currently expects net revenue in the fourth fiscal quarter of 2016 ending October 1, 2016 to be approximately $135 million to $145 million.

Looking forward, Jonathan Chou commented, "While we generally experience strength into the fourth quarter, the cyclical fluctuations over the prior 12 months have shifted this normal seasonal pattern. Expectations on more robust semiconductor unit growth into calendar years 2017 and 2018, in addition to our product portfolio's close alignment with major industry trends as well as our growing base of advanced packaging features and solutions, provide us with cautious optimism as we look ahead."

Earnings Conference Call Details

A conference call to discuss these results will be held today, August 3, 2016, 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 10, 2016 by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13641129. A webcast replay will also be available at investor.kns.com.

About Kulicke & Soffa

Kulicke & Soffa (NASDAQ: KLIC) is a global leader in the design and manufacture of semiconductor, LED and electronic assembly equipment. As a pioneer in this industry, 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, advanced SMT, wedge bonding and a broader range of expendable tools to its core ball bonding products. Combined with its extensive expertise in process technology, K&S is well positioned to help customers meet the challenges of assembling the next-generation semiconductor and LED devices. (www.kns.com) The content of our website is not incorporated by reference herein.

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; 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. 2015 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 STATEMENTS OF OPERATIONS

(In thousands, except per share and employee data)

(Unaudited)

 
Three months ended   Nine months ended
July 2, 2016   June 27, 2015   July 2, 2016   June 27, 2015
Net revenue $ 216,414 $ 164,634 $ 481,348 $ 417,299
Cost of sales 116,374   87,063   261,240   216,424  
Gross profit: 100,040   77,571   220,108   200,875  
Operating expenses:
Selling, general and administrative 36,776 33,151 94,928 90,140
Research and development 22,960 25,380 69,593 68,133
Amortization of intangible assets 1,665 2,946 4,996 7,032
Restructuring 17   8   1,965   (33 )
Total operating expenses 61,418   61,485   171,482   165,272  
Income from operations: 38,622 16,086 48,626 35,603
Other income (expense):
Interest income 972 469 2,295 1,184
Interest expense (290 ) (291 ) (839 ) (910 )
Income from operations before income taxes 39,304 16,264 50,082 35,877
Income tax expense / (benefit) 7,519   (8,775 ) 13,299   (4,935 )
Net income $ 31,785   $ 25,039   $ 36,783   $ 40,812  
 
Net income per share:
Basic 0.45   0.33   0.52   0.53  
Diluted 0.45   0.33   0.52   0.53  
 
Weighted average shares outstanding:
Basic 70,379 75,420 70,502 76,376
Diluted 70,843 75,891 70,802 76,778
 
Three months ended   Nine months ended
Supplemental financial data: July 2, 2016 June 27, 2015   July 2, 2016 June 27, 2015
Depreciation and amortization $ 4,019 $ 5,415 $ 12,221 $ 13,978
Capital expenditures 1,480 2,265 4,396 5,709
Equity-based compensation expense:
Cost of sales 98 88 323 304
Selling, general and administrative 1,331 1,914 2,021 6,389
Research and development 472   518   1,592   1,843  
Total equity-based compensation expense $ 1,901   $ 2,520   $ 3,936   $ 8,536  
 
As of
July 2, 2016 June 27, 2015
Backlog of orders 1 $ 82,976 $ 75,101
Number of employees 2,743 2,827
 
  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 BALANCE SHEETS

(In thousands)

(Unaudited)

 
As of
July 2, 2016   October 3, 2015
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 516,128 $ 498,614
Accounts and other receivable, net of allowance for doubtful accounts of $488 and $621 respectively 171,809 108,596
Inventories, net 89,556 79,096
Prepaid expenses and other current assets 17,830 16,937
Deferred income taxes   4,126  
TOTAL CURRENT ASSETS 795,323 707,369
 
Property, plant and equipment, net 50,195 53,234
Goodwill 81,272 81,272
Intangible assets 52,475 57,471
Other assets 7,442   5,120  
TOTAL ASSETS $ 986,707   $ 904,466  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 71,116 $ 25,521
Accrued expenses and other current liabilities 53,809 45,971
Income taxes payable 6,945   2,442  
TOTAL CURRENT LIABILITIES 131,870 73,934
 
Financing obligation 17,084 16,483
Deferred income taxes 30,908 33,958
Other liabilities 11,173   10,842  
TOTAL LIABILITIES 191,035   135,217  
 
SHAREHOLDERS' EQUITY
Common stock, no par value 495,961 492,339
Treasury stock, at cost (139,407 ) (124,856 )
Retained earnings 439,646 402,863
Accumulated other comprehensive loss (528 ) (1,097 )
TOTAL SHAREHOLDERS' EQUITY 795,672   769,249  
   
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 986,707   $ 904,466  
 
   

KULICKE & SOFFA INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 
Three months ended Nine months ended
July 2, 2016   June 27, 2015 July 2, 2016   June 27, 2015
Net cash provided by / (used in) operating activities $ 35,437 $ (214 ) $ 34,458 $ 48,346
Net cash used in investing activities, continuing operations (1,847 ) (362 ) (3,639 ) (90,919 )
Net cash used in financing activities, continuing operations (102 ) (51,245 ) (14,195 ) (69,837 )
Effect of exchange rate changes on cash and cash equivalents 647   600   890   354  
Changes in cash and cash equivalents 34,135 (51,221 ) 17,514 (112,056 )
Cash and cash equivalents, beginning of period 481,993   527,146   498,614   587,981  
Cash and cash equivalents, end of period $ 516,128   $ 475,925   $ 516,128   $ 475,925  

Kulicke & Soffa Industries, Inc.
Joseph Elgindy
Investor Relations & Strategic Initiatives
P: +1-215-784-7500
P: +31-40-272-3016
F: +1-215-784-6180

Source: Kulicke & Soffa Industries, Inc.

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