Kulicke & Soffa Reports Third Quarter 2019 Results

SINGAPORE--()--Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) (“Kulicke & Soffa”, “K&S” or the “Company”), today announced financial results of its third fiscal quarter ended June 29, 2019. The Company reported third quarter net revenue of $127.1 million, net income of $1.3 million and non-GAAP net income of $3.6 million.

During its third fiscal quarter, K&S repurchased $33.2 million of common stock in open market transactions at an average price of $21.57 per share. The Company also recorded a quarterly dividend equivalent to $0.12 per share during its third fiscal quarter.

Quarterly Results - U.S. GAAP

 


Fiscal Q3 2019

Change vs.
Fiscal Q3 2018

Change vs.
Fiscal Q2 2019

Net Revenue

$127.1 million

down 52.7%

up 9.7%

Gross Profit

$58.8 million

down 53.7%

up 5.8%

Gross Margin

46.2%

down 100 bps

down 170 bps

Income from Operations

$1.8 million

down 97.2%

up 172%

Operating Margin

1.4%

down 2260 bps

up 360 bps

Net Income

$1.3 million

down 97.8%

up 136.1%

Net Margin

1.0%

down 2140 bps

up 410 bps

EPS – Diluted(a)

$0.02

down 97.7%

up 140%

  1. 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 Q3 2019

Change vs.
Fiscal Q3 2018

Change vs.
Fiscal Q2 2019

Income from Operations

$4.3 million

down 93.5%

up 458.3%

Operating Margin

3.3%

down 2140 bps

up 440 bps

Net Income

$3.6 million

down 94.2%

up 1700%

Net Margin

2.8%

down 2040 bps

up 260 bps

EPS - Diluted

$0.06

down 93.3%

up 100%

* 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 broad macro environment continues to be dynamic, we continue to generate profits, invest in new organic development, reduce our shares outstanding and drive market acceptance of several new offerings. We continue to maintain operational flexibility and are positioned well for long-term growth."

During the June quarter the Company incurred a $3.9 million tax expense primarily related to jurisdictional income mix and certain recurring non-cash valuation allowances.

Third Quarter Fiscal 2019 Financial Highlights

  • Net revenue of $127.1 million.
  • Gross margin of 46.2%.
  • Net income of $1.3 million or $0.02 per share; non-GAAP net income of $3.6 million or $0.06 per share.
  • Cash, cash equivalents, and short-term investments, net of bank overdraft were $572.3 million as of June 29, 2019.

Fourth Quarter Fiscal 2019 Outlook

The Company currently expects net revenue in the fourth fiscal quarter of 2019 ending September 28, 2019 to be approximately $130 million to $150 million, representing a 10% sequential improvement.

Looking forward, Dr. Fusen Chen commented, "The recent revenue recognition of PIXALUXTM, our mini and microLED solution, in addition to the ongoing advanced packaging progress highlights our expanding market reach and long-term growth potential. In the near-term, we anticipate typical seasonal dynamics to drive ongoing capacity digestion and a gradual business recovery into fiscal 2020."

Earnings Conference Call Details

A conference call to discuss these results will be held today, August 1, 2019, beginning at 6:00pm 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 August 8th by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13692276. 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, and include, but are not limited to, statements that relate to our future expected dividend payouts and growth opportunities. 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 the Company fails to meet its operational and financial targets in order to adhere to its dividend policy; 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; the risk that the Company will not identify suitable acquisition opportunities or that any acquisitions will not be successful; the risk that the Company fails to timely remediate the material weaknesses identified in the Company’s internal controls over financial reporting or that new material weaknesses or significant deficiencies emerge; and the factors listed or discussed in Kulicke and Soffa Industries, Inc. 2018 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

 

June 29, 2019

 

June 30, 2018

 

June 29, 2019

 

June 30, 2018

Net revenue

$

127,109

 

 

$

268,834

 

 

$

400,225

 

 

$

704,297

 

Cost of sales

68,329

 

 

141,865

 

 

211,073

 

 

380,679

 

Gross profit

58,780

 

 

126,969

 

 

189,152

 

 

323,618

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

26,294

 

 

30,609

 

 

82,062

 

 

85,484

 

Research and development

28,229

 

 

29,974

 

 

87,609

 

 

88,881

 

Amortization of intangible assets

1,843

 

 

1,962

 

 

5,589

 

 

5,927

 

Restructuring

587

 

 

(39

)

 

(25

)

 

1,268

 

Total operating expenses

56,953

 

 

62,506

 

 

175,235

 

 

181,560

 

Income from operations

1,827

 

 

64,463

 

 

13,917

 

 

142,058

 

Other income (expense):

 

 

 

 

 

 

 

Interest income

3,956

 

 

3,459

 

 

11,647

 

 

8,420

 

Interest expense

(632

)

 

(263

)

 

(1,137

)

 

(799

)

Income before income taxes

5,151

 

 

67,659

 

 

24,427

 

 

149,679

 

Income tax expense

3,864

 

 

7,282

 

 

19,106

 

 

122,494

 

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

 

 

121

 

 

72

 

 

144

 

Net income

$

1,287

 

 

$

60,256

 

 

$

5,249

 

 

$

27,041

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

0.02

 

 

$

0.87

 

 

$

0.08

 

 

$

0.39

 

Diluted

$

0.02

 

 

$

0.86

 

 

$

0.08

 

 

$

0.38

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

$

0.12

 

 

$

0.12

 

 

$

0.36

 

 

$

0.12

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

64,683

 

 

69,125

 

 

65,914

 

 

70,019

 

Diluted

65,431

 

 

70,302

 

 

66,597

 

 

71,113

 

 

Three months ended

 

Nine months ended

Supplemental financial data:

June 29, 2019

 

June 30, 2018

 

June 29, 2019

 

June 30, 2018

Depreciation and amortization

$

4,995

 

 

$

4,951

 

 

$

15,001

 

 

$

14,163

 

Capital expenditures

2,136

 

 

4,071

 

 

9,312

 

 

16,481

 

Equity-based compensation expense:

 

 

 

 

 

 

 

Cost of sales

161

 

 

126

 

 

471

 

 

384

 

Selling, general and administrative

2,616

 

 

2,111

 

 

7,871

 

 

5,877

 

Research and development

820

 

 

656

 

 

2,430

 

 

1,963

 

Total equity-based compensation expense

$

3,597

 

 

$

2,893

 

 

$

10,772

 

 

$

8,224

 

 

As of

 

June 29, 2019

 

June 30, 2018

Backlog of orders 1

$

96,690

 

 

$

146,578

 

Number of employees

2,721

 

 

3,109

 

  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

 

June 29, 2019

 

September 29, 2018

ASSETS

CURRENT ASSETS

 

 

 

Cash and cash equivalents

$

395,538

 

 

$

320,630

 

Restricted cash

474

 

 

518

 

Short-term investments

248,000

 

 

293,000

 

Accounts and other receivable, net of allowance for doubtful accounts of $0 and $385, respectively

151,246

 

 

243,373

 

Inventories, net

98,049

 

 

115,191

 

Prepaid expenses and other current assets

25,133

 

 

14,561

 

TOTAL CURRENT ASSETS

918,440

 

 

987,273

 

 

 

 

 

Property, plant and equipment, net

74,851

 

 

76,067

 

Goodwill

56,248

 

 

56,550

 

Intangible assets, net

46,198

 

 

52,871

 

Deferred income taxes

8,159

 

 

9,017

 

Equity investments

6,301

 

 

1,373

 

Other assets

2,372

 

 

2,589

 

TOTAL ASSETS

$

1,112,569

 

 

$

1,185,740

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

 

 

 

Short term debt

$

71,194

 

 

$

 

Accounts payable

42,337

 

 

48,527

 

Accrued expenses and other current liabilities

63,465

 

 

105,978

 

Income taxes payable

12,258

 

 

19,571

 

TOTAL CURRENT LIABILITIES

189,254

 

 

174,076

 

 

 

 

 

Financing obligation

14,701

 

 

15,187

 

Deferred income taxes

27,154

 

 

25,591

 

Income taxes payable

84,617

 

 

81,491

 

Other liabilities

9,408

 

 

9,188

 

TOTAL LIABILITIES

325,134

 

 

305,533

 

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

 

Common stock, no par value

530,016

 

 

519,244

 

Treasury stock, at cost

(334,248

)

 

(248,664

)

Retained earnings

595,803

 

 

613,529

 

Accumulated other comprehensive loss

(4,136

)

 

(3,902

)

TOTAL SHAREHOLDERS' EQUITY

$

787,435

 

 

$

880,207

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,112,569

 

 

$

1,185,740

 

 

KULICKE & SOFFA INDUSTRIES, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

Three months ended

 

Nine months ended

 

June 29, 2019

 

June 30, 2018

 

June 29, 2019

 

June 30, 2018

Net cash (used in)/provided by operating activities

$

(154

)

 

$

36,770

 

 

$

83,181

 

 

$

93,843

 

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

(43,315

)

 

25,929

 

 

30,374

 

 

(57,527

)

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

20,341

 

 

(41,564

)

 

(38,751

)

 

(65,805

)

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

(197

)

 

1,379

 

 

60

 

 

(251

)

Changes in cash, cash equivalents and restricted cash

(23,325

)

 

22,514

 

 

74,864

 

 

(29,740

)

Cash, cash equivalents and restricted cash, beginning of period

419,337

 

 

340,686

 

 

321,148

 

 

392,940

 

Cash, cash equivalents and restricted cash, end of period

$

396,012

 

 

$

363,200

 

 

$

396,012

 

 

$

363,200

 

 

 

 

 

 

 

 

 

Short-term investments

248,000

 

 

258,000

 

 

248,000

 

 

258,000

 

Total cash, cash equivalents, restricted cash and short-term investments

$

644,012

 

 

$

621,200

 

 

$

644,012

 

 

$

621,200

 

 

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

 

 

June 29, 2019

 

June 30, 2018

 

March 30, 2019

Net revenue

 

$

127,109

 

 

$

268,834

 

 

$

115,908

 

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

 

1,827

 

 

64,463

 

 

(2,465

)

U.S. GAAP operating margin

 

1.4

%

 

24.0

%

 

(2.1

)%

 

 

 

 

 

 

 

Pre-tax non-GAAP items:

 

 

 

 

 

 

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

 

1,843

 

 

1,962

 

 

1,869

 

Restructuring

 

587

 

 

(39

)

 

(643

)

Non-GAAP income/(loss) from operations

 

$

4,257

 

 

$

66,386

 

 

$

(1,239

)

Non-GAAP operating margin

 

3.3

%

 

24.7

%

 

(1.1

)%

 

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

 

 

June 29, 2019

 

June 30, 2018

 

March 30, 2019

Net revenue

 

$

127,109

 

 

$

268,834

 

 

$

115,908

 

U.S. GAAP net income/(loss)

 

1,287

 

 

60,256

 

 

(3,555

)

U.S. GAAP net margin

 

1.0

%

 

22.4

%

 

(3.1

)%

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

 

 

 

 

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

 

1,843

 

 

1,962

 

 

1,869

 

Restructuring

 

587

 

 

(39

)

 

(643

)

Income tax expense- Tax Reform

 

 

 

 

 

2,499

 

Net income tax (benefit)/expense on non-GAAP items

 

(102

)

 

78

 

 

28

 

Total non-GAAP adjustments

 

2,328

 

 

2,001

 

 

3,753

 

Non-GAAP net income

 

3,615

 

 

62,257

 

 

198

 

Non-GAAP net margin

 

2.8

%

 

23.2

%

 

0.2

%

 

 

 

 

 

 

 

U.S. GAAP net income/(loss) per share:

 

 

 

 

 

 

Basic

 

0.02

 

 

0.87

 

 

(0.05

)

Diluted(a)

 

0.02

 

 

0.86

 

 

(0.05

)

 

 

 

 

 

 

 

Non-GAAP adjustments per share:(b)

 

 

 

 

 

 

Basic

 

0.04

 

 

0.03

 

 

0.05

 

Diluted

 

0.04

 

 

0.03

 

 

0.05

 

 

 

 

 

 

 

 

Non-GAAP net income per share:

 

 

 

 

 

 

Basic

 

$

0.06

 

 

$

0.90

 

 

$

 

Diluted(c)

 

$

0.06

 

 

$

0.89

 

 

$

 

  1. 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.
  2. 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.
  3. Non-GAAP diluted net earnings per share reflects any dilutive effect of outstanding restricted stock units and stock options.

 

Contacts

Kulicke & Soffa Industries, Inc.
Joseph Elgindy
Investor Relations & Strategic Initiatives
P: +1-215-784-7518
F: +1-215-784-6180

Release Summary

Kulicke & Soffa guides 10% sequential improvement

$Cashtags

Contacts

Kulicke & Soffa Industries, Inc.
Joseph Elgindy
Investor Relations & Strategic Initiatives
P: +1-215-784-7518
F: +1-215-784-6180