November 15, 2016

Kulicke & Soffa Reports Fourth Quarter and Fiscal Year 2016 Results

SINGAPORE--(BUSINESS WIRE)-- Kulicke and Soffa Industries, Inc. (NASDAQ:KLIC) ("Kulicke & Soffa", "K&S" or the "Company") today announced results for its fourth quarter and fiscal year ended October 1, 2016.

 
Quarterly Results
           

Fiscal Q4 2016

Change vs. Change vs.
     

 

    Fiscal Q4 2015     Fiscal Q3 2016
Net Revenue     $145.8 million     up 22.3%     down 32.6%
Gross Profit     $66.6 million     up 14.4%     down 33.4%
Gross Margin     45.7%     down 320 bps     down 50 bps
Income from Operations     $3.9 million     up 143.8%     down 89.9%
Operating Margin     2.7%     up 130 bps     down 1510 bps
Net Income     $10.3 million     up 5.1%     down 67.5%
Net Margin     7.1%     down 110 bps     down 760 bps
EPS - Diluted     $0.15     up 15.4%     down 66.7%
 

Dr. Fusen Chen, Kulicke & Soffa's President and Chief Executive Officer, stated, "For the September quarter, we have exceeded our revenue guidance and experienced improved demand over the same period in the prior fiscal year. This better-than-expected performance was largely due to the strengthening of the memory segment and new traction within the automotive segment."

The Company's reported fourth quarter net income included a unique operating expense reserve in the amount of $7 million related to restructuring of its international operations. This amount was offset by a favorable tax benefit of $7.6 million, related to the same restructuring exercise.

Fourth Quarter Fiscal 2016 Key Product Trends

  • Ball bonder equipment net revenue decreased 35.8% over the June quarter.
  • Wedge bonder equipment net revenue decreased 21.8% over the June quarter.
  • Advanced packaging mass reflow equipment net revenue decreased by 42.0% over the June quarter.

Fiscal Year 2016 Financial Highlights

  • Net revenue of $627.2 million.
  • Gross margin of 45.7%.
  • Net income was $47.1 million or $0.67 per diluted share.
  • Cash, cash equivalents and investments were $547.9 million as at October 1, 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.

First Quarter Fiscal 2017 Outlook

The Company currently expects net revenue in the first fiscal quarter of 2017 ending December 31, 2016 to be approximately $135 million to $145 million.

Looking forward, Dr. Chen commented, "As we continue driving efficiency through our manufacturing process and supply chain, we maintain optimism through the softer near-term outlook. Looking ahead, we anticipate the industry will return to a more normalized growth rate in fiscal 2017. In parallel, we continue to aggressively pursue meaningful opportunities becoming increasingly accessible through our evolving industry, market-facing development and our broadening suite of solutions."

Earnings Conference Call Details

A conference call to discuss these results will be held today, November 15, 2016, beginning at 8:00am (EST). 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 November 22, 2016 by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13647734. 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, the continuing transition from gold to copper wire bonding, replacement demand, our research and development efforts, our ability to identify and realize new growth opportunities and our ability to control costs. 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; a substantial completion of transition from gold to copper wire bonding by the industry, 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 Twelve months ended
October 1,   October 3, October 1,   October 3,
2016 2015 2016 2015
Net revenue 145,844 119,172 627,192 536,471
Cost of sales 79,223   60,955   340,463   277,379  
Gross profit 66,621   58,217   286,729   259,092  
Operating expenses:
Selling, general and administrative 29,778 29,944 124,706 120,084
Research and development 22,781 21,900 92,374 90,033
Amortization of intangible assets 1,665 2,851 6,661 9,883
Restructuring 8,484   1,874   10,449   1,841  
Total operating expenses 62,708   56,569   234,190   221,841  
Income from operations 3,913 1,648 52,539 37,251
Other income (expense):
Interest income 1,023 453 3,318 1,637
Interest expense (268 ) (273 ) (1,107 ) (1,183 )
Income from operations before income taxes 4,668 1,828 54,750 37,705
Income taxes (benefit)/ expense (5,661 ) (7,999 ) 7,638   (12,934 )
Net income $ 10,329   $ 9,827   $ 47,112   $ 50,639  
 
Net income per share:
Basic $ 0.15   $ 0.14   $ 0.67   $ 0.67  
Diluted $ 0.15   $ 0.13   $ 0.67   $ 0.67  
 
Weighted average shares outstanding:
Basic 70,404 72,731 70,477 75,414
Diluted 71,017 72,883 70,841 75,659
  Three months ended   Twelve months ended
October 1,   October 3, October 1,   October 3,
Supplemental financial data: 2016 2015 2016 2015
Depreciation and amortization $ 4,009 $ 4,994 $ 16,230 $ 18,972
Capital expenditures 1,905 3,810 6,301 9,519
Equity-based compensation expense:
Cost of sales 98 89 421 393
Selling, general and administrative 1,223 2,738 3,244 9,127
Research and development 473   626   2,065   2,469
Total equity-based compensation expense $ 1,794   $ 3,453   $ 5,730   $ 11,989
 
             
As of
October 1,   October 3,
2016 2015
Backlog of orders1 87,200 52,500
Number of employees 2,389 2,373
1.   Represents customer purchase commitments. While the Company believes these orders will proceed, they are generally cancellable by customers without penalty.
 
     
KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
As of
October 1, 2016   October 3, 2015
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 547,907 $ 498,614

Accounts and notes receivable, net of allowance for doubtful accounts of $506 and

$143 respectively

130,455 108,596
Inventories, net 87,295 79,096
Prepaid expenses and other current assets 15,285 16,937
Deferred income taxes   4,126  
TOTAL CURRENT ASSETS 780,942 707,369
 
Property, plant and equipment, net 50,342 53,234
Goodwill 81,272 81,272
Intangible assets 50,810 57,471
Other assets 19,078   5,120  
TOTAL ASSETS $ 982,444   $ 904,466  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 41,813 $ 25,521
Accrued expenses and other current liabilities 63,954 45,971
Income taxes payable 12,830   2,442  
TOTAL CURRENT LIABILITIES 118,597 73,934
 
Financing obligation 16,701 16,483
Deferred income taxes 27,697 33,958
Other liabilities 12,931   10,842  
TOTAL LIABILITIES 175,926   135,217  
 
SHAREHOLDERS' EQUITY
Common stock, no par value 498,676 492,339
Treasury stock, at cost (139,407 ) (124,856 )
Retained earnings 449,975 402,863
Accumulated other comprehensive loss (2,726 ) (1,097 )
TOTAL SHAREHOLDERS' EQUITY $ 806,518   $ 769,249  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 982,444   $ 904,466  
 
       
KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Three months ended Twelve months ended
October 1,   October 3, October 1,   October 3,
2016 2015 2016 2015
Net cash provided by operating activities 33,949 39,529 68,407 87,875

Net cash used in investing activities, continuing

operations

(1,526 ) (3,190 ) (5,165 ) (94,109 )

Net cash used in financing activities, continuing

operations

(291 ) (14,622 ) (14,486 ) (84,459 )
Effect of exchange rate changes on cash and cash equivalents (353 ) 972   537   1,326  
Changes in cash and cash equivalents 31,779 22,689 49,293 (89,367 )
Cash and cash equivalents, beginning of period 516,128   475,925   498,614   587,981  
Cash and cash equivalents, end of period $ 547,907   $ 498,614   $ 547,907   $ 498,614  
 

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
investor@kns.com

Source: Kulicke and Soffa Industries, Inc.

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