KLIC Kulicke and Soffa Industries Inc

Delivers Strong Profitability and Outlook

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    

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Kulicke & Soffa Industries, Inc.Joseph ElgindyInvestor Relations & Strategic InitiativesP: +1-215-784-7518F: +1-215-784-6180