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Kulicke & Soffa Reports Fourth Quarter 2019 Results

SINGAPORE--(BUSINESS WIRE)--

Kulicke and Soffa Industries, Inc. (KLIC) (“Kulicke & Soffa”, “K&S” or the “Company”), today announced financial results of its fourth fiscal quarter ended September 28, 2019. The Company reported fourth quarter net revenue of $139.8 million, net income of $6.4 million and non-GAAP net income of $9.3 million.

During its fourth fiscal quarter, K&S repurchased $15.0 million of common stock in open market transactions at an average price of $22.37 per share. The Company also recorded a quarterly dividend equivalent to $0.12 per share during its fourth fiscal quarter.

 

Quarterly Results - U.S. GAAP

 

 

Fiscal Q4 2019

 

Change vs.

Fiscal Q4 2018

 

Change vs.

Fiscal Q3 2019

Net Revenue

 

$139.8 million

 

down 24.3%

 

up 10%

Gross Profit

 

$65.4 million

 

down 23.8%

 

up 11.2%

Gross Margin

 

46.8%

 

up 40 bps

 

up 60 bps

Income from Operations

 

$7.7 million

 

down 68.7%

 

up 327.8%

Operating Margin

 

5.5%

 

down 780 bps

 

up 410 bps

Net Income

 

$6.4 million

 

down 78.4%

 

up 392.3%

Net Margin

 

4.6%

 

down 1140 bps

 

up 360 bps

EPS – Diluted

 

$0.10

 

down 76.7%

 

up 400%

 

Quarterly Results - Non-GAAP

 

Fiscal Q4 2019

Change vs.

Fiscal Q4 2018

Change vs.

Fiscal Q3 2019

Income from Operations

$11.2 million

 

down 59%

 

up 160.5%

Operating Margin

8.0%

 

down 670 bps

 

up 470 bps

Net Income

$9.3 million

 

down 70.1%

 

up 158.3%

Net Margin

6.7%

 

down 1020 bps

 

up 390 bps

EPS - Diluted

$0.14

 

down 68.9%

 

up 133.3%

 

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.

Despite broader macro and industry headwinds through fiscal 2019, the Company maintained an aggressive pace of R&D investment, increased the competitiveness of current and new offerings and generated free cash flow of $54.2 million.

Dr. Fusen Chen, Kulicke & Soffa's President and Chief Executive Officer, stated, “Nearly all of our businesses experienced demand improvements sequentially through the September quarter, and have improved materially since the March quarter. In parallel, we have also made meaningful progress in expanding our served markets through customer acceptance and ongoing traction of our multiple advanced packaging offerings, including PIXALUXTM, our mini and microLED solution.”

Fiscal Year 2019 Financial Highlights

  • Net revenue of $540.1 million.
  • Gross margin of 47.1%.
  • Net income of $11.7 million or 0.18 per share; non-GAAP net income of $30.1 million or $0.46 per share.
  • The Company repurchased a total of 4.7 million shares of common stock at a cost of $100.5 million.

Fourth Quarter Fiscal 2019 Financial Highlights

  • Net revenue of $139.8 million.
  • Gross margin of 46.8%.
  • Net income of $6.4 million or 0.10 per share; non-GAAP net income of $9.3 million or $0.14 per share.
  • Cash, cash equivalents, and short-term investments, net of bank overdraft were $532.3 million as of September 28, 2019.

First Quarter Fiscal 2020 Outlook

The Company currently expects net revenue in the first fiscal quarter of 2020 ending December 28, 2019 to be approximately $130 million to $150 million. Over the past 5 years, December quarter sales have averaged a 14% sequential revenue decline over the September quarter.

Looking forward, Dr. Fusen Chen commented, "Considering demand improvements within our core business, market traction within our newly developed products, and ongoing customer engagement within our growing base of Advanced Packaging solutions, we are increasingly optimistic as we look ahead into fiscal year 2020.”

Earnings Conference Call Details

A conference call to discuss these results will be held today, November 14, 2019, beginning at 6:00pm 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 November 21st by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13694867. 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 (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

Twelve months ended

 

September 28,

2019

September 29,

2018

September 28,

2019

September 29,

2018

Net revenue

$

139,827

 

$

184,824

 

$

540,052

 

$

889,121

 

Cost of sales

 

74,389

 

 

99,001

 

 

285,462

 

 

479,680

 

Gross profit

 

65,438

 

 

85,823

 

 

254,590

 

 

409,441

 

 

 

 

 

 

Operating expenses:

 

 

 

 

Selling, general and administrative

 

25,723

 

 

27,854

 

 

107,785

 

 

113,338

 

Research and development

 

28,560

 

 

30,740

 

 

116,169

 

 

119,621

 

Amortization of intangible assets

 

1,823

 

 

1,899

 

 

7,412

 

 

7,826

 

Restructuring

 

1,639

 

 

756

 

 

1,614

 

 

2,024

 

Total operating expenses

 

57,745

 

 

61,249

 

 

232,980

 

 

242,809

 

Income from operations

 

7,693

 

 

24,574

 

 

21,610

 

 

166,632

 

Other income / (expense):

 

 

 

 

Interest income

 

3,485

 

 

3,551

 

 

15,132

 

 

11,971

 

Interest expense

 

(918

)

 

(255

)

 

(2,055

)

 

(1,054

)

Income before income taxes

 

10,260

 

 

27,870

 

 

34,687

 

 

177,549

 

Income tax expense / (benefit)

 

3,804

 

 

(1,750

)

 

22,910

 

 

120,744

 

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

 

52

 

 

(15

)

 

124

 

 

129

 

Net income

$

6,404

 

$

29,635

 

$

11,653

 

$

56,676

 

 

 

 

 

 

Net income per share:

 

 

 

 

Basic

$

0.10

 

$

0.44

 

$

0.18

 

$

0.82

 

Diluted

$

0.10

 

$

0.43

 

$

0.18

 

$

0.80

 

 

 

 

 

 

Cash dividends declared per share

$

0.12

 

$

0.12

 

$

0.48

 

$

0.24

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

Basic

 

63,401

 

 

67,462

 

 

65,286

 

 

69,380

 

Diluted

 

64,251

 

 

68,675

 

 

65,948

 

 

70,419

 

 
 

 

Three months ended

Twelve months ended

Supplemental financial data:

September 28,

2019

September 29,

2018

September 28,

2019

September 29,

2018

Depreciation and amortization

$

5,303

 

$

4,852

 

$

20,304

 

$

19,015

 

Capital expenditures

 

2,517

 

 

3,960

 

 

11,829

 

 

20,441

 

Equity-based compensation expense:

 

 

 

 

Cost of sales

 

161

 

 

131

 

 

632

 

 

515

 

Selling, general and administrative

 

2,632

 

 

2,671

 

 

10,503

 

 

8,548

 

Research and development

 

767

 

 

659

 

 

3,197

 

 

2,622

 

Total equity-based compensation expense

$

3,560

 

$

3,461

 

$

14,332

 

$

11,685

 

 
 

 

As of

 

September 28,

2019

September 29,

2018

Backlog of orders 1

$

104,711

 

$

141,665

 

Number of employees

 

2,614

 

 

2,912

 

 

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

 

September 28,

2019

September 29,

2018

ASSETS

CURRENT ASSETS

 

 

Cash and cash equivalents

$

364,184

 

$

320,630

 

Restricted cash

 

518

 

Short-term investments

 

229,000

 

 

293,000

 

Accounts and notes receivable, net of allowance for doubtful accounts of $597 and $385 respectively

 

195,830

 

 

243,373

 

Inventories, net

 

89,308

 

 

115,191

 

Prepaid expenses and other current assets

 

15,429

 

 

14,561

 

TOTAL CURRENT ASSETS

 

893,751

 

 

987,273

 

 

 

 

Property, plant and equipment, net

 

72,370

 

 

76,067

 

Goodwill

 

55,691

 

 

56,550

 

Intangible assets, net

 

42,651

 

 

52,871

 

Deferred income taxes

 

6,409

 

 

9,017

 

Equity investments

 

6,250

 

 

1,373

 

Other assets

 

2,494

 

 

2,589

 

TOTAL ASSETS

$

1,079,616

 

$

1,185,740

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

 

 

Short term debt

$

60,904

 

$

Accounts payable

 

36,711

 

 

48,527

 

Accrued expenses and other current liabilities

 

64,533

 

 

105,978

 

Income taxes payable

 

12,494

 

 

19,571

 

TOTAL CURRENT LIABILITIES

 

174,642

 

 

174,076

 

 

 

 

Financing obligation

 

14,207

 

 

15,187

 

Deferred income taxes

 

32,054

 

 

25,591

 

Income taxes payable

 

80,290

 

 

81,491

 

Other liabilities

 

9,360

 

 

9,188

 

TOTAL LIABILITIES

 

310,553

 

 

305,533

 

 

 

 

SHAREHOLDERS' EQUITY

 

 

Common stock, no par value

 

533,590

 

 

519,244

 

Treasury stock, at cost

 

(349,212

)

 

(248,664

)

Retained earnings

 

594,625

 

 

613,529

 

Accumulated other comprehensive loss

 

(9,940

)

 

(3,902

)

TOTAL SHAREHOLDERS' EQUITY

$

769,063

 

$

880,207

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,079,616

 

$

1,185,740

 

 
 

KULICKE & SOFFA INDUSTRIES, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

Three months ended

Twelve months ended

 

September 28,

2019

September 29,

2018

September 28,

2019

September 29,

2018

Net cash (used in)/provided by operating activities

$

(17,214

)

$

29,656

 

$

65,967

 

$

123,499

 

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

 

17,094

 

 

(39,344

)

 

47,468

 

 

(96,871

)

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

 

(32,567

)

 

(33,330

)

 

(71,318

)

 

(99,135

)

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

 

859

 

 

966

 

 

919

 

 

715

 

Changes in cash, cash equivalents and restricted cash

 

(31,828

)

 

(42,052

)

 

43,036

 

 

(71,792

)

Cash, cash equivalents and restricted cash, beginning of period

 

396,012

 

 

363,200

 

 

321,148

 

 

392,940

 

Cash, cash equivalents and restricted cash, end of period

$

364,184

 

$

321,148

 

$

364,184

 

$

321,148

 

 

 

 

 

 

Short-term investments

 

229,000

 

 

293,000

 

 

229,000

 

 

293,000

 

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

$

593,184

 

$

614,148

 

$

593,184

 

$

614,148

 

 

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

 

September 28,

2019

 

September 29,

2018

 

June 29,

2019

Net revenue

$

139,827

 

$

184,824

 

$

127,109

 

U.S. GAAP income from operations

 

7,693

 

 

24,574

 

 

1,827

 

U.S. GAAP operating margin

 

5.5

%

 

13.3

%

 

1.4

%

 

 

 

 

Pre-tax non-GAAP items:

 

 

 

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

$

1,823

 

$

1,899

 

$

1,843

 

Restructuring

 

1,639

 

 

756

 

 

587

 

Non-GAAP income from operations

$

11,155

 

$

27,229

 

$

4,257

 

Non-GAAP operating margin

 

8.0

%

 

14.7

%

 

3.3

%

 
 

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

 

September 28,

2019

 

September 28,

2019

 

September 29,

2018

 

June 29,

2019

Net revenue

$

540,052

 

 

$

139,827

 

 

$

184,824

 

 

$

127,109

 

U.S. GAAP net income

 

11,653

 

 

 

6,404

 

 

 

29,635

 

 

 

1,287

 

U.S. GAAP net margin

 

2.2

%

 

 

4.6

%

 

 

16.0

%

 

 

1.0

%

 

 

 

 

 

 

 

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

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

$

7,412

 

 

$

1,823

 

 

$

1,899

 

 

 

1,843

 

Restructuring

 

1,614

 

 

 

1,639

 

 

 

756

 

 

 

587

 

Income tax expense- Tax Reform

 

9,911

 

 

 

(300

)

 

 

(1,137

)

 

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

 

(465

)

 

 

(250

)

 

 

44

 

 

 

(102

)

Total non-GAAP adjustments

 

18,472

 

 

 

2,912

 

 

 

1,562

 

 

 

2,328

 

Non-GAAP net income

 

30,125

 

 

 

9,316

 

 

 

31,197

 

 

 

3,615

 

Non-GAAP net margin

 

5.6

%

 

 

6.7

%

 

 

16.9

%

 

 

2.8

%

 

 

 

 

 

 

 

 

U.S. GAAP net income per share:

 

 

 

 

 

 

 

Basic

 

0.18

 

 

 

0.10

 

 

 

0.44

 

 

 

0.02

 

Diluted(a)

 

0.18

 

 

 

0.10

 

 

 

0.43

 

 

 

0.02

 

 

 

 

 

 

 

 

 

Non-GAAP adjustments per share:(b)

 

 

 

 

 

 

 

Basic

 

0.28

 

 

 

0.05

 

 

 

0.02

 

 

 

0.04

 

Diluted

 

0.28

 

 

 

0.04

 

 

 

0.02

 

 

 

0.04

 

 

 

 

 

 

 

 

 

Non-GAAP net income per share:

 

 

 

 

 

 

 

Basic

$

0.46

 

 

$

0.15

 

 

$

0.46

 

 

$

0.06

 

Diluted(c)

$

0.46

 

 

$

0.14

 

 

$

0.45

 

 

$

0.06

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

65,286

 

 

 

63,401

 

 

 

67,462

 

 

 

64,683

 

Diluted(b)

 

65,948

 

 

 

64,251

 

 

 

68,675

 

 

 

65,431

 

 

 

 

 

 

 

 

 
(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, 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.

 

 

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