KLIC Kulicke and Soffa Industries Inc

• Reports $213.7 million of December quarters sales, up 43% over the same period last year
• Delivers $38.6 million of December quarter operating profit, up 123% over the same period last year
• Guides record first fiscal half 2018 revenue between $419 and $429 million

Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) (“Kulicke & Soffa”, “K&S” or the “Company”) today announced results for its first fiscal quarter ended December 30, 2017. The Company reported first quarter net revenue of $213.7 million, a diluted EPS of $(0.98) and a non-GAAP diluted EPS was $0.54.

  Quarterly Results - U.S. GAAP        

Fiscal Q1 2018

      Change vs.

Fiscal Q1 2017

      Change vs.

Fiscal Q4 2017

Net Revenue       $213.7 million       up 42.8%       down 1.0% Gross Profit       $99.0 million       up 44.9%       down 5.4% Gross Margin       46.3%       up 60 bps       down 220 bps Income from Operations $38.6 million up 123.1% up 4.6% Operating Margin       18.1%       up 650 bps       up 100 bps Net Loss $(69.3) million down 544.2% down 289.3% Net Margin       (32.4)%       down 4280 bps       down 4940 bps EPS – Diluted(a)       $(0.98)       down 545.5%       down 292.2%  

(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 December 30, 2017, 1.2 million shares of restricted stock units and stock options were excluded due to the Company's net loss.

   

Quarterly Results - Non-GAAP

        Fiscal Q1 2018       Change vs.

Fiscal Q1 2017

      Change vs.

Fiscal Q4 2017

Income from Operations       $41.8 million       up 122.3%       up 3.5% Operating Margin       19.6%       up 700 bps       up 90 bps Net Income $38.8 million up 126.9% down 3.2% Net Margin       18.2%       up 680 bps       down 40 bps EPS - Diluted       $0.54       up 125.0%       down 3.6%  

* 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, “Strength during the December quarter was driven by our competitive automotive, LED, memory and image sensor solutions in addition to the ongoing strong business environment."

During the December quarter the Company incurred a charge of $105 million due to the impact of the Tax Cuts and Reform Act of 2017. On a non-GAAP basis, diluted earnings per share increased by 125% over the same period in the prior year.

First Quarter Fiscal 2018 Financial Highlights

• Net revenue of $213.7 million.
• Gross margin of 46.3%.
• Non-GAAP net income of $38.8 million or $0.54 per share.
• Cash, cash equivalents, and short-term investments were $649.7 million as of December 30, 2017.

Second Quarter Fiscal 2018 Outlook

The Company currently expects net revenue in the second fiscal quarter of 2018 ending March 31, 2018 to be approximately $205 million to $215 million. For the first fiscal half of 2018, this guidance represents an increase of 21% over the same period in the prior year.

Looking forward, Dr. Fusen Chen commented, "Our competitive positions and exposure to higher-growth segments provides additional upside beyond the already favorable semiconductor unit growth rate of 8.9%, calendar 2017 through 2021. In addition, we remain focused to further enhance these long-term growth prospects through traction with our growing advanced packaging offerings and share gains within our recurring revenue business."

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.

Earnings Conference Call Details

A conference call to discuss these results will be held today, January 31, 2018, beginning at 6:00 pm (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 February 14, 2018 by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13675324. 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; the impact of changes in tax law; and the factors listed or discussed in Kulicke and Soffa Industries, Inc. 2017 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 December 30, 2017     December 31, 2016 Net revenue $ 213,691 $ 149,639 Cost of sales   114,652     81,321   Gross profit   99,039     68,318     Operating expenses: Selling, general and administrative 26,961 28,009 Research and development 30,250 21,505 Amortization of intangible assets 1,943 1,523 Restructuring   1,314     —   Total operating expenses   60,468     51,037   Income from operations 38,571 17,281 Other income (expense): Interest income 1,975 1,172 Interest expense   (266 )   (262 ) Income before income taxes 40,280 18,191 Income tax expense 109,633 2,608 Share of results of equity-method investee, net of tax   (16 )   —   Net (loss)/income $ (69,337 ) $ 15,583     Net (loss)/income per share: Basic $ (0.98 ) $ 0.22   Diluted $ (0.98 ) $ 0.22     Weighted average shares outstanding: Basic 70,577 70,854 Diluted 70,577 71,763     Three months ended Supplemental financial data: December 30, 2017 December 31, 2016 Depreciation and amortization $ 4,468 $ 3,944 Capital expenditures 6,257 2,229 Equity-based compensation expense: Cost of sales 132 141 Selling, general and administrative 2,323 2,734 Research and development   654     727   Total equity-based compensation expense $ 3,109   $ 3,602       As of December 30, 2017 December 31, 2016 Backlog of orders 1 $ 164,968 $ 86,676 Number of employees 3,181 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 CONDENSED BALANCE SHEETS

(In thousands)

(Unaudited)

        As of December 30, 2017     September 30, 2017 ASSETS CURRENT ASSETS Cash and cash equivalents $ 390,661 $ 392,410 Restricted cash 528 530 Short-term investments 259,000 216,000 Accounts and other receivable, net of allowance for doubtful accounts of $354 and $79 respectively 173,777 198,480 Inventories, net 106,683 122,023 Prepaid expenses and other current assets   22,686     23,939   TOTAL CURRENT ASSETS 953,335 953,382   Property, plant and equipment, net 71,720 67,762 Goodwill 57,063 56,318 Intangible assets, net 60,586 62,316 Deferred income taxes 12,276 27,771 Equity investments 1,518 1,502 Other assets   2,088     2,056   TOTAL ASSETS $ 1,158,586   $ 1,171,107     LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 68,370 $ 51,354 Accrued expenses and other current liabilities 80,147 132,314 Income taxes payable   18,137     16,780   TOTAL CURRENT LIABILITIES 166,654 200,448   Financing obligation 16,130 16,074 Deferred income taxes 26,940 26,779 Income taxes payable 89,491 6,438 Other liabilities   9,000     8,432   TOTAL LIABILITIES   308,215     258,171     SHAREHOLDERS' EQUITY Common stock, no par value 510,736 506,515 Treasury stock, at cost (160,884 ) (157,604 ) Retained earnings 496,655 561,986 Accumulated other comprehensive income   3,864     2,039   TOTAL SHAREHOLDERS' EQUITY   850,371     912,936               TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,158,586   $ 1,171,107            

KULICKE & SOFFA INDUSTRIES, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

    Three months ended December 30, 2017 December 31, 2016 Net cash provided by operating activities $ 50,333 $ 30,049 Net cash used in investing activities, continuing operations (48,183 ) (2,659 ) Net cash (used in) / provided by financing activities, continuing operations (3,391 ) 142 Effect of exchange rate changes on cash, cash equivalents and restricted cash   (510 )   1,987   Changes in cash, cash equivalents and restricted cash (1,751 ) 29,519 Cash, cash equivalents and restricted cash, beginning of period*   392,940     423,907   Cash, cash equivalents and restricted cash, end of period $ 391,189   $ 453,426     Short-term investments   259,000     124,000   Total cash, cash equivalents, restricted cash and short-term investments $ 650,189   $ 577,426   *Certain time deposits as at October 1, 2016 were previously reclassified from cash equivalents to short-term investments for comparative purposes.              

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 December 30, 2017 December 31, 2016 September 30, 2017 Net revenue 213,691 149,639 215,892 U.S. GAAP Income from operations 38,571 17,281 36,904 U.S. GAAP operating margin 18.0 % 11.5 % 17.1 %   Pre-tax non-GAAP items: Amortization related to intangible assets acquired through business combination- selling, general and administrative 1,943 1,523 1,989 Restructuring 1,314   —   1,531   Non-GAAP Income from operations 41,828   18,804   40,424   Non-GAAP operating margin 19.6 % 12.6 % 18.7 %      

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)

    Three months ended December 30, 2017 December 31, 2016 September 30, 2017 Net revenue 213,691 149,639 215,892 U.S. GAAP net (loss)/income (69,337 ) 15,583 36,576 U.S. GAAP net margin (32.4 )% 10.4 % 16.9 %   Pre-tax non-GAAP adjustments: Amortization related to intangible assets acquired through business combination- selling, general and administrative 1,943 1,523 1,989 Restructuring 1,314 — 1,531 Income tax expense- Tax Reform 104,955 — — Net income tax benefit on non-GAAP items (36 ) (22 ) (44 ) Total non-GAAP adjustments 108,176   1,501   3,476   Non-GAAP net income 38,839   17,084   40,052   Non-GAAP net margin 18.2 % 11.4 % 18.6 %   U.S. GAAP net (loss)/income per share: Basic (0.98 ) 0.22 0.52 Diluted (a) (0.98 ) 0.22 0.51   Non-GAAP adjustments per share: Basic 1.53 0.02 0.05 Diluted 1.51 0.02 0.05   Non-GAAP net income per share: Basic 0.55   0.24   0.57   Diluted (b) 0.54   0.24   0.56       (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 December 30, 2017, 1.2 million shares of restricted stock units and stock options were excluded due to the Company's net loss. (b) Non-GAAP diluted net earnings per share reflects any dilutive effect of outstanding restricted stock units and stock options.  

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