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Kulicke & Soffa Reports Fourth Quarter 2022 Results

SINGAPORE, Nov. 16, 2022 /PRNewswire/ -- Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) ("Kulicke & Soffa", "K&S" or the "Company"), today announced financial results of its fourth fiscal quarter ended October 1, 2022. The Company reported fourth quarter net revenue of $286.3 million, net income of $64.9 million and non-GAAP net income of $70.2 million.

Quarterly Results - U.S. GAAP


 

Fiscal Q4 2022

 

Change vs.

Fiscal Q4 2021

Change vs.

Fiscal Q3 2022

Net Revenue

$286.3 million

down 41%

down 23.1%

Gross Profit

$132.7 million

down 42.6%

down 30.4%

Gross Margin

46.3 %

down 140 bps

down 490 bps

Income from Operations

$67.5 million

down 56.4%

down 44.7%

Operating Margin

23.6 %

down 830 bps

down 920 bps

Net Income

$64.9 million

down 51.5%

down 45.5%

Net Margin

22.7 %

down 490 bps

down 930 bps

EPS – Diluted

$1.10

down 47.6%

down 44.7%

 

Quarterly Results - Non-GAAP


Fiscal Q4 2022

Change vs.

Fiscal Q4 2021

Change vs.

Fiscal Q3 2022

Income from Operations

$73.6 million

down 54.1%

down 42.9%

Operating Margin

25.7 %

down 730 bps

down 900 bps

Net Income

$70.2 million

down 49.2%

down 43.9%

Net Margin

24.5 %

down 400 bps

down 910 bps

EPS - Diluted

$1.19

down 45.2%

down 43.1%

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.

Fusen Chen, Kulicke & Soffa's President and Chief Executive Officer, stated, "Although the near-term environment is dynamic,  past efforts to enhance our culture, optimize our market-leading businesses, and drive innovations across several emerging technology transitions, provide additional paths for sustainable, long-term growth. Our  growing portfolio of competitive, market-ready solutions and financial performance stand as testaments to this progress."

Through organic development, prudent acquisitions and close industry partnerships, Kulicke & Soffa's served available market has grown to approximately $4.7 billion in fiscal 2022, up 51 percent from fiscal 2018.

Fiscal Year 2022 Financial Highlights

  • Net revenue of $1,503.6 million.
  • Gross margin of 49.8%.
  • Net income of $433.5 million or $7.09 per share; non-GAAP net income of $455.6 million or $7.45 per share.
  • Adjusted free cash flow of $367.4 million.
  • Repurchased approximately 5.6 million shares of common stock through open market and accelerated programs at a cost of $282.8 million.

Fourth Quarter Fiscal 2022 Financial Highlights 

  • Net revenue of $286.3 million.
  • Gross margin of 46.3%.
  • Net income of $64.9 million or $1.10 per share; non-GAAP net income of $70.2 million or $1.19 per share.
  • Cash, cash equivalents, and short-term investments were $775.5 million as of October 1, 2022.

First Quarter Fiscal 2023 Outlook

Due to a combination of macro and industry related factors, K&S continues to anticipate a period of capacity digestion for its high-volume assembly solutions over the coming quarters. The Company currently expects net revenue in the first fiscal quarter of 2023, ending December 31, 2022, to be approximately $175.0 million, +/- $20 million, and expects non-GAAP EPS to be approximately $0.20, +/- 10%.

Looking forward, Fusen Chen commented, "Our access to new markets and optimization efforts have enhanced our through-cycle performance and we remain focused on executing strategically near-term. Fiscal 2023 is a critical adoption year for our growing portfolio of Advanced Packaging, Automotive and Advanced Display solutions which are increasingly aligned with long-term, fundamental technology transitions which are well underway."

Earnings Conference Call Details

A conference call to discuss these results will be held tomorrow, November 17, 2022, 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 December 1, 2022 by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13734020. 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 the following non-GAAP financial results: income from operations, operating margin, net income, net margin, net income per diluted share and adjusted free cash flow. The Company's non-GAAP results exclude amortization related to intangible assets acquired through business combinations, costs associated with restructuring and severance, equity-based compensation, acquisition and integration cost, impairment relating to assets acquired through business combinations, impairment relating to equity investments, income tax expense arising from discrete tax items triggered by acquisition, restructuring and significant changes in tax laws, gain/loss on disposal of business, as well as tax benefits or expense associated with the foregoing non-GAAP items. The non-GAAP adjustments may or may not be infrequent or nonrecurring in nature, but are a result of periodic or non-core operating activities. 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 metrics 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 financial tables at the end of this press release.

Management has not reconciled its outlook for non-GAAP Diluted EPS to Diluted EPS for Q1F23 as it does not provide guidance on the reconciling items between Diluted EPS and non-GAAP Diluted EPS, as a result of the uncertainty regarding, and the potential variability of, these items. The actual amount of such reconciling items could have a significant impact on our non-GAAP Diluted EPS and, accordingly, a reconciliation of Diluted EPS to non-GAAP Diluted EPS for Q1F23 is not available without unreasonable effort.

About Kulicke & Soffa

Kulicke & Soffa (NASDAQ: KLIC) is a leading provider of semiconductor, LED 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, mini and micro LED transfer 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.

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. While these forward-looking statements represent our judgments and future expectations concerning our business, including the importance and competitiveness of our advanced display products and other emerging technology transitions, 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 effects of the COVID-19 pandemic and macroeconomic headwinds on our business, our ability to develop, manufacture and gain market acceptance of new products, and the other factors listed or discussed in our Annual Report on Form 10-K for the fiscal year ended October 2, 2021, filed on November 18, 2021, 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.

Contacts:

Kulicke and Soffa Industries, Inc.
Joseph Elgindy
Finance
P: +1-215-784-7518
F: +1-215-784-6180

 

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except per share and employee data)

(Unaudited)



Three months ended


Twelve months ended


October 1,
2022


October 2,
2021


October 1,
2022


October 2,
2021

Net revenue

$           286,313


$           485,326


$        1,503,620


$        1,517,664

Cost of sales

153,626


254,011


755,300


820,678

Gross profit

132,687


231,315


748,320


696,986









Operating expenses:








Selling, general and administrative

31,275


40,186


136,215


139,224

Research and development

32,356


34,929


136,852


137,478

Acquisition-related cost

118



118


1,730

Amortization of intangible assets

1,374


1,322


4,917


5,974

Restructuring

20


42


146


133

Total operating expenses

65,143


76,479


278,248


284,539

Income from operations

67,544


154,836


470,072


412,447

Other income / (expense):








Interest income

4,025


520


7,124


2,321

Interest expense

(35)


(72)


(208)


(218)

Income before income taxes

71,534


155,284


476,988


414,550

Income tax expense

6,630


21,573


43,443


47,295

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




94

Net income

$             64,904


$           133,711


$           433,545


$           367,161









Net income per share:








Basic

$                  1.12


$                  2.16


$                  7.21


$                  5.92

Diluted

$                  1.10


$                  2.10


$                  7.09


$                  5.78









Cash dividends declared per share

$                  0.17


$                  0.14


$                  0.68


$                  0.56









Weighted average shares outstanding:








Basic

57,804


61,966


60,164


62,009

Diluted

58,816


63,611


61,182


63,515










Three months ended


Twelve months ended

Supplemental financial data:

October 1,
2022


October 2,
2021


October 1,
2022


October 2,
2021

Depreciation and amortization

$                5,520


$                5,258


$             21,293


$             19,810

Capital expenditures

21,020


5,792


32,233


22,555

Equity-based compensation expense:








Cost of sales

233


202


960


828

Selling, general and administrative

3,426


2,887


13,911


10,998

Research and development

854


909


4,115


3,676

Total equity-based compensation expense

$                4,513


$                3,998


$             18,986


$             15,502












As of






October 1, 2022


October 2, 2021

Number of employees





3,167


3,586

 

 

 

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands)

(Unaudited)



As of


October 1, 2022


October 2, 2021

ASSETS

CURRENT ASSETS




Cash and cash equivalents

$                    555,537


$                    362,788

Short-term investments

220,000


377,000

Accounts and notes receivable, net of allowance for doubtful accounts of $0 and
$687 respectively

309,323


421,193

Inventories, net

184,986


167,323

Prepaid expenses and other current assets

62,200


23,586

TOTAL CURRENT ASSETS

1,332,046


1,351,890





Property, plant and equipment, net

80,908


67,982

Operating right-of-use assets

41,767


41,592

Goodwill

68,096


72,949

Intangible assets, net

31,939


42,752

Deferred tax assets

25,572


15,715

Equity investments

5,397


6,388

Other assets

2,874


2,363

TOTAL ASSETS

$                 1,588,599


$                 1,601,631





LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES




Accounts payable

67,311


154,636

Operating lease liabilities

6,766


4,903

Accrued expenses and other current liabilities

134,541


161,570

Income taxes payable

40,063


30,766

TOTAL CURRENT LIABILITIES

248,681


351,875





Deferred tax liabilities

34,037


32,828

Income taxes payable

64,634


69,422

Operating lease liabilities

34,927


38,084

Other liabilities

11,670


14,185

TOTAL LIABILITIES

$                    393,949


$                    506,394





SHAREHOLDERS' EQUITY




Common stock, no par value

561,684


550,117

Treasury stock, at cost

(675,800)


(400,412)

Retained earnings

1,341,666


948,554

Accumulated other comprehensive loss

(32,900)


(3,022)

TOTAL SHAREHOLDERS' EQUITY

$                 1,194,650


$                 1,095,237





TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$                 1,588,599


$                 1,601,631

 

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



Three months ended


Twelve months ended


October 1,
2022


October 2,
2021


October 1,
2022


October 2,
2021

Net cash provided by operating activities

$           116,563


$           123,376


$           390,188


$           300,032

Net cash provided by / (used in) investing activities, continuing operations

67,457


(135,928)


133,799


(81,707)

Net cash used in financing activities, continuing operations

(70,286)


(12,276)


(321,191)


(44,258)

Effect of exchange rate changes on cash and cash equivalents

(3,978)


(383)


(10,047)


594

Changes in cash and cash equivalents

109,756


(25,211)


192,749


174,661

Cash and cash equivalents, beginning of period

445,781


387,999


362,788


188,127

Cash and cash equivalents, end of period

$           555,537


$           362,788


$           555,537


$           362,788









Short-term investments

220,000


377,000


220,000


377,000

Total cash, cash equivalents, and short-term investments

$           775,537


$           739,788


$           775,537


$           739,788

 

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



October 1, 2022


October 2, 2021


July 2, 2022

Net revenue


$              286,313


$               485,326


$                372,137

U.S. GAAP income from operations


67,544


154,836


122,077

U.S. GAAP operating margin


23.6 %


31.9 %


32.8 %








Pre-tax non-GAAP items:







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


$                   1,374


$                    1,322


1,109

Acquisition-related costs


118



Equity-based compensation


4,513


3,998


4,465

Restructuring


20


42


Impairment charges




1,346

Non-GAAP income from operations


$                73,569


$               160,198


$                128,997

Non-GAAP operating margin


25.7 %


33.0 %


34.7 %

 

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)



Twelve months ended


Three months ended


October 1,
2022


October 1,
2022


October 2,
2021


July 2,
2022

Net revenue

$  1,503,620


$      286,313


$      485,326


$      372,137

U.S. GAAP net income

433,545


64,904


133,711


119,034

U.S. GAAP net margin

28.8 %


22.7 %


27.6 %


32.0 %









Non-GAAP adjustments:








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

$          4,917


$          1,374


$          1,322


1,109

Restructuring

146


20


42


Acquisition-related costs

118


118



Equity-based compensation

18,986


4,513


3,998


4,465

Impairment charges

1,346




1,346

Net income tax benefit on non-GAAP items

(3,447)


(689)


(807)


(865)

Total non-GAAP adjustments

22,066


5,336


4,555


6,055

Non-GAAP net income

455,611


70,240


138,266


125,089

Non-GAAP net margin

30.3 %


24.5 %


28.5 %


33.6 %









U.S. GAAP net income per share:








Basic

7.21


1.12


2.16


2.02

Diluted(a)

7.09


1.10


2.10


1.99









Non-GAAP adjustments per share:(b)








Basic

0.36


0.10


0.07


0.10

Diluted

0.36


0.09


0.07


0.10









Non-GAAP net income per share:








Basic

$            7.57


$            1.22


$            2.23


$            2.12

Diluted(c)

$            7.45


$            1.19


$            2.17


$            2.09









Weighted average shares outstanding:








Basic

60,164


57,804


61,966


58,985

Diluted

61,182


58,816


63,611


59,955









(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, acquisition and integration cost, equity-based compensation expenses, impairment relating to equity investments and income tax effects 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.

 

Reconciliation of U.S. GAAP Cash provided by Operating Activities

to Non-GAAP Adjusted Free Cash Flow

(In thousands, except percentages)

(unaudited)



Twelve months ended


Three months ended


October 1,
2022


October 1,
2022


October 2,
2021


July 2,
2022

U.S. GAAP net cash provided by operating activities

$         390,188


$         116,563


$         123,376


$         104,616

Expenditures for property, plant and equipment

(22,985)


(12,605)


(6,028)


(4,722)

Proceeds from sales of property, plant and equipment

181


62


100










Non-GAAP adjusted free cash flow

367,384


104,020


117,448


99,894

 

SOURCE Kulicke & Soffa Industries, Inc.

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