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KULICKE & SOFFA REPORTS SECOND QUARTER 2020 RESULTS

Kulicke & Soffa Reports Second Quarter 2020 Results

April 29, 2020 at 10:00 PM EDT

SINGAPORE--(BUSINESS WIRE)--Apr. 29, 2020-- Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) (“Kulicke & Soffa,” “K&S” or the “Company”), today announced financial results of its second fiscal quarter ended March 28, 2020. The Company reported second quarter net revenue of $150.7 million, net income of $11.9 million and non-GAAP net income of $13.7 million.

Quarterly Results - U.S. GAAP

 

Fiscal Q2 2020

Change vs. Fiscal Q2 2019

Change vs. Fiscal Q1 2020

Net Revenue

$150.7 million

up 30.1%

up 4.4%

Gross Profit

$69.3 million

up 24.6%

down 1.6%

Gross Margin

46.0%

down 190 bps

down 280 bps

Income from Operations

$11.1 million

up 544%

down 17.2%

Operating Margin

7.3%

up 950 bps

down 200 bps

Net Income

$11.9 million

up 430.6%

down 11.9%

Net Margin

7.9%

up 1100 bps

down 150 bps

EPS – Diluted(a)

$0.19

up 480%

down 9.5%

(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. For the three months ended March 30, 2019, 0.8 million shares of restricted stock units and stock options were excluded due to the Company's net loss.

Quarterly Results - Non-GAAP

 

Fiscal Q2 2020

Change vs. Fiscal Q2 2019

Change vs. Fiscal Q1 2020

Income from Operations

$12.9 million

up 1175%

down 17.3%

Operating Margin

8.6%

up 970 bps

down 220 bps

Net Income

$13.7 million

up 6750%

down 12.7%

Net Margin

9.1%

up 890 bps

down 180 bps

EPS - Diluted

$0.22

NA

down 8.3%

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, "While the ongoing COVID-19 pandemic continues to have severe health and economic effects throughout the world, and has created operational challenges for our business, our strong fundamental position and long-term efforts around business continuity planning have allowed us to continue pursuing an aggressive development roadmap while minimizing operational disruptions. We also remain focused on increasing production and driving market adoption of our new advanced packaging and advanced LED offerings."

The Company's manufacturing facility in China was impacted by a government-mandated shutdown but has returned to full capacity within the second fiscal quarter. Its other manufacturing facilities in Singapore and the Netherlands also remain at full capacity.

Second Quarter Fiscal 2020 Financial Highlights

  • Net revenue of $150.7 million.
  • Gross margin of 46.0%.
  • Net income of $11.9 million or $0.19 per share; non-GAAP net income of $13.7 million or $0.22 per share.
  • Cash, cash equivalents, and short-term investments, net of bank overdraft facility were $524.7 million as of March 28, 2020.

Third Quarter Fiscal 2020 Outlook

The Company currently expects net revenue in the third fiscal quarter of 2020 ending June 27, 2020 to be approximately $140 million to $160 million. This outlook considers currently projected demand impacts of ongoing global semiconductor production disruptions, due to regional shelter-in-place and movement control orders.

Looking forward, Dr. Fusen Chen commented, "The current global environment remains very fluid and dynamic, but we continue to anticipate gradual demand improvements through our second fiscal half. We anticipate ongoing improvements in the general semiconductor, LED and memory markets."

Earnings Conference Call Details

A conference call to discuss these results will be held tomorrow, April 30, 2020, beginning at 8:00am EDT. 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 May 7th by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13700377. 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. 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 factors listed or discussed in our 2019 Annual Report on Form 10-K, our Current Report on Form 8-k filed April 29, 2020, 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

 

Six months ended

 

March 28, 2020

 

March 30, 2019

 

March 28, 2020

 

March 30, 2019

Net revenue

$

150,741

 

 

$

115,908

 

 

$

295,038

 

 

$

273,116

 

Cost of sales

81,438

 

 

60,335

 

 

155,371

 

 

142,744

 

Gross profit

69,303

 

 

55,573

 

 

139,667

 

 

130,372

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

27,331

 

 

27,235

 

 

53,755

 

 

55,768

 

Research and development

29,067

 

 

29,577

 

 

57,359

 

 

59,380

 

Amortization of intangible assets

1,820

 

 

1,869

 

 

3,637

 

 

3,746

 

Restructuring

9

 

 

(643

)

 

426

 

 

(612

)

Total operating expenses

58,227

 

 

58,038

 

 

115,177

 

 

118,282

 

Income/(loss) from operations

11,076

 

 

(2,465

)

 

24,490

 

 

12,090

 

Other income (expense):

 

 

 

 

 

 

 

Interest income

2,675

 

 

3,865

 

 

5,514

 

 

7,691

 

Interest expense

(661

)

 

(254

)

 

(1,244

)

 

(505

)

Income before income taxes

13,090

 

 

1,146

 

 

28,760

 

 

19,276

 

Income tax expense

1,162

 

 

4,672

 

 

3,295

 

 

15,242

 

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

40

 

 

29

 

 

100

 

 

72

 

Net income /(loss)

$

11,888

 

 

$

(3,555

)

 

$

25,365

 

 

$

3,962

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

0.19

 

 

$

(0.05

)

 

$

0.40

 

 

$

0.06

 

Diluted

$

0.19

 

 

$

(0.05

)

 

$

0.39

 

 

$

0.06

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

$

0.12

 

 

$

0.12

 

 

$

0.24

 

 

$

0.24

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

63,679

 

 

65,930

 

 

63,675

 

 

66,530

 

Diluted

64,219

 

 

65,930

 

 

64,266

 

 

67,344

 

 

Three months ended

 

Six months ended

Supplemental financial data:

March 28, 2020

 

March 30, 2019

 

March 28, 2020

 

March 30, 2019

Depreciation and amortization

$

4,769

 

 

$

5,237

 

 

$

9,528

 

 

$

10,006

 

Capital expenditures

2,775

 

 

2,234

 

 

5,099

 

 

7,176

 

Equity-based compensation expense:

 

 

 

 

 

 

 

Cost of sales

183

 

 

160

 

 

415

 

 

310

 

Selling, general and administrative

2,695

 

 

2,330

 

 

5,430

 

 

5,255

 

Research and development

844

 

 

811

 

 

1,486

 

 

1,609

 

Total equity-based compensation expense

$

3,722

 

 

$

3,301

 

 

$

7,331

 

 

$

7,174

 

 

As of

 

March 28, 2020

 

March 30, 2019

Backlog of orders 1

$

136,353

 

 

$

89,439

 

Number of employees

2,929

 

 

2,747

 

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

 

March 28, 2020

 

September 28, 2019

ASSETS

CURRENT ASSETS

 

 

 

Cash and cash equivalents

$

392,307

 

 

$

364,184

 

Short-term investments

248,000

 

 

229,000

 

Accounts and other receivable, net of allowance for doubtful accounts of $501 and $597, respectively

199,793

 

 

195,830

 

Inventories, net

106,178

 

 

89,308

 

Prepaid expenses and other current assets

24,149

 

 

15,429

 

TOTAL CURRENT ASSETS

970,427

 

 

893,751

 

 

 

 

 

Property, plant and equipment, net

55,647

 

 

72,370

 

Operating right-of-use assets

22,692

 

 

 

Goodwill

55,946

 

 

55,691

 

Intangible assets, net

39,757

 

 

42,651

 

Deferred tax assets

6,975

 

 

6,409

 

Equity investments

7,427

 

 

6,250

 

Other assets

2,027

 

 

2,494

 

TOTAL ASSETS

$

1,160,898

 

 

$

1,079,616

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

 

 

 

Short term debt

$

115,617

 

 

$

60,904

 

Accounts payable

50,530

 

 

36,711

 

Operating lease liabilities

5,236

 

 

 

Accrued expenses and other current liabilities

78,296

 

 

64,533

 

Income taxes payable

12,358

 

 

12,494

 

TOTAL CURRENT LIABILITIES

262,037

 

 

174,642

 

 

 

 

 

Financing obligation

 

 

14,207

 

Deferred income taxes

33,690

 

 

32,054

 

Income taxes payable

74,469

 

 

80,290

 

Operating lease liabilities

18,550

 

 

 

Other liabilities

9,754

 

 

9,360

 

TOTAL LIABILITIES

398,500

 

 

310,553

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

Common stock, no par value

532,912

 

 

533,590

 

Treasury stock, at cost

(365,095

)

 

(349,212

)

Retained earnings

604,013

 

 

594,625

 

Accumulated other comprehensive loss

(9,432

)

 

(9,940

)

TOTAL SHAREHOLDERS' EQUITY

$

762,398

 

 

$

769,063

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,160,898

 

 

$

1,079,616

 

 

KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

 

 

Three months ended

 

Six months ended

 

March 28, 2020

 

March 30, 2019

 

March 28, 2020

 

March 30, 2019

Net cash provided by operating activities

$

14,055

 

 

$

27,334

 

 

$

39,083

 

 

$

83,335

 

Net cash (used in)/provided by investing activities

(131,466

)

 

138,962

 

 

(24,979

)

 

73,689

 

Net cash provided by/(used in) financing activities

12,106

 

 

(25,176

)

 

14,258

 

 

(59,092

)

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

238

 

 

275

 

 

(239

)

 

257

 

Changes in cash, cash equivalents and restricted cash

(105,067

)

 

141,395

 

 

28,123

 

 

98,189

 

Cash and cash equivalents, beginning of period

497,374

 

 

277,942

 

 

364,184

 

 

321,148

 

Cash and cash equivalents, end of period

$

392,307

 

 

$

419,337

 

 

$

392,307

 

 

$

419,337

 

 

 

 

 

 

 

 

 

Short-term investments

248,000

 

 

208,000

 

 

248,000

 

 

208,000

 

Total cash, cash equivalents and short-term investments

$

640,307

 

 

$

627,337

 

 

$

640,307

 

 

$

627,337

 

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

 

 

March 28, 2020

 

March 30, 2019

 

December 28, 2019

Net revenue

 

$

150,741

 

 

$

115,908

 

 

$

144,297

 

U.S. GAAP income/(loss) from operations

 

11,076

 

 

(2,465

)

 

13,414

 

U.S. GAAP operating margin

 

7.3

%

 

(2.1

)%

 

9.3

%

 

 

 

 

 

 

 

Pre-tax non-GAAP items:

 

 

 

 

 

 

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

 

1,820

 

 

1,869

 

 

1,817

 

Restructuring

 

9

 

 

(643

)

 

417

 

Non-GAAP income/(loss) from operations

 

$

12,905

 

 

$

(1,239

)

 

$

15,648

 

Non-GAAP operating margin

 

8.6

%

 

(1.1

)%

 

10.8

%

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

 

 

March 28, 2020

 

March 30, 2019

 

December 28, 2019

Net revenue

 

$

150,741

 

 

$

115,908

 

 

$

144,297

 

U.S. GAAP net income/(loss)

 

11,888

 

 

(3,555

)

 

13,477

 

U.S. GAAP net margin

 

7.9

%

 

(3.1

)%

 

9.3

%

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

 

 

 

 

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

 

1,820

 

 

1,869

 

 

1,817

 

Restructuring

 

9

 

 

(643

)

 

417

 

Income tax expense- Tax Reform

 

 

 

2,499

 

 

 

Net income tax benefit on non-GAAP items

 

(27

)

 

28

 

 

(51

)

Total non-GAAP adjustments

 

$

1,802

 

 

$

3,753

 

 

$

2,183

 

Non-GAAP net income

 

$

13,690

 

 

$

198

 

 

$

15,660

 

Non-GAAP net margin

 

9.1

%

 

0.2

%

 

10.9

%

 

 

 

 

 

 

 

U.S. GAAP net income per share:

 

 

 

 

 

 

Basic

 

0.19

 

 

(0.05

)

 

0.21

 

Diluted(a)

 

0.19

 

 

(0.05

)

 

0.21

 

 

 

 

 

 

 

 

Non-GAAP adjustments per share:(b)

 

 

 

 

 

 

Basic

 

0.03

 

 

0.05

 

 

0.03

 

Diluted

 

0.03

 

 

0.05

 

 

0.03

 

 

 

 

 

 

 

 

Non-GAAP net income per share:

 

 

 

 

 

 

Basic

 

$

0.22

 

 

$

 

 

$

0.24

 

Diluted(c)

 

$

0.22

 

 

$

 

 

$

0.24

 

(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. For the three months ended March 30, 2019, 0.8 million shares of restricted stock units and stock options were excluded due to the Company's net loss.

(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.

 

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.