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Kulicke & Soffa Reports Second Quarter 2021 Results

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·14 min read
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Delivers GAAP Operating Margin of 24.4% and Strong Outlook

SINGAPORE, May 5, 2021 /PRNewswire/ -- Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) ("Kulicke & Soffa," "K&S" or the "Company"), today announced financial results of its second fiscal quarter ended April 3, 2021. The Company reported second quarter net revenue of $340.2 million, net income of $71.3 million, representing EPS of $1.13 per fully diluted share, and non-GAAP net income of $79.4 million, representing non-GAAP EPS of $1.26 per fully diluted share.

Kulicke & Soffa is a critical supplier of global semiconductor and LED production equipment and solutions.  Recent supply chain mitigation efforts have increased its outlook into the second fiscal half.
Kulicke & Soffa is a critical supplier of global semiconductor and LED production equipment and solutions. Recent supply chain mitigation efforts have increased its outlook into the second fiscal half.

Quarterly Results - U.S. GAAP


Fiscal Q2 2021

Change vs.

Fiscal Q2 2020

Change vs.

Fiscal Q1 2021

Net Revenue

$340.2 million

up 125.7%

up 27%

Gross Profit

$148.5 million

up 114.3%

up 22.2%

Gross Margin

43.7%

down 230 bps

down 170 bps

Income from Operations

$83.1 million

up 648.6%

up 53.9%

Operating Margin

24.4%

up 1700 bps

up 420 bps

Net Income

$71.3 million

up 499.2%

up 47.3%

Net Margin

21.0%

up 1310 bps

up 290 bps

EPS – Diluted

$1.13

up 494.7%

up 46.8%



Quarterly Results - Non-GAAP


Fiscal Q2 2021

Change vs.

Fiscal Q2 2020

Change vs.

Fiscal Q1 2021

Income from Operations

$89.8 million

up 441%

up 50.2%

Operating Margin

26.4%

up 1540 bps

up 410 bps

Net Income

$79.4 million

up 367.1%

up 47.9%

Net Margin

23.4%

up 1210 bps

up 340 bps

EPS - Diluted

$1.26

up 384.6%

up 46.5%

A reconciliation between the GAAP and non-GAAP adjusted results is provided in the financial tables included in this release. See also the "Use of non-GAAP Financial Results" section.

Due to ongoing global supply chain challenges and strong business conditions, the Company incurred expediting fees and spot purchases of $4.9 million during the second fiscal quarter. These incremental expenses materially contributed to the sequential gross margin change in the second fiscal quarter and are anticipated to continue temporarily through the second fiscal half of 2021. Management remains committed to fundamental gross margin improvement over the long-term.

Fusen Chen, Kulicke & Soffa's President and Chief Executive Officer, stated, "Demand continues to be strong for our solutions and is supported by structural dynamics, including the increasing global reliance on semiconductors and the increasing capital intensity within the semiconductor assembly process. These improving dynamics, combined with our ongoing strategic execution in supporting technology change for leading-edge applications and also for the display market, provide many new opportunities for shareholder value creation."

Second Quarter Fiscal 2021 Financial Highlights

  • Net revenue of $340.2 million.

  • Gross margin of 43.7%.

  • Net income of $71.3 million or $1.13 per share; non-GAAP net income of $79.4 million or $1.26 per share.

  • Cash, cash equivalents, and short-term investments were $564.3 million as of April 3, 2021.

Third Quarter Fiscal 2021 Outlook

The Company currently expects net revenue in the third fiscal quarter of 2021 ending July 3, 2021 to be approximately $400 million +/- $20 million, and expects non-GAAP EPS to be approximately $1.35 +/- 10%.

Looking forward, Fusen Chen commented, "Our global operations and R&D teams have aggressively worked to mitigate supply chain constraints within our control. While ongoing challenges remain, these efforts have allowed us to further support our customers during this period of industry growth and increase our outlook into the second fiscal half."

Earnings Conference Call Details

A conference call to discuss these results will be held on May 6, 2021, 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 link and supplemental earnings presentation 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 13th by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13717954. 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 the following non-GAAP financial results: income from operations, operating margin, net income, net margin and net income per diluted share. The Company's non-GAAP results exclude amortization of intangibles, costs associated with restructuring and severance, equity-based compensation, acquisition and integration costs, impairment relating to assets acquired through business combinations, income tax expense arising from discrete tax items triggered by significant changes in tax law, gain/loss on disposals of businesses, as well as tax benefits or expense associated with the foregoing non-GAAP items. The non-GAAP adjustments may or may not be infrequent or nonrecurring in nature, but are a result of periodic or non-core operating activities. 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 these non-GAAP metrics 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 financial tables at the end of this press release.

About Kulicke & Soffa

Kulicke & Soffa (NASDAQ: KLIC) is a leading provider of semiconductor, LED 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.

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 effects of the COVID-19 pandemic on our business, and the other factors listed or discussed in our Annual Report on Form 10-K for the fiscal year ended October 3, 2020, filed on November 20, 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.

Contacts:

Kulicke & Soffa


Joseph Elgindy


Investor Relations


P: +1-215-784-7518


F: +1-215-784-6180




KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except per share and employee data)

(Unaudited)






Three months ended


Six months ended


April 3, 2021


March 28, 2020


April 3, 2021


March 28, 2020

Net revenue

$

340,163



$

150,741



$

608,020



$

295,038


Cost of sales

191,673



81,438



338,044



155,371


Gross profit

148,490



69,303



269,976



139,667










Operating expenses:








Selling, general and administrative

27,774



27,331



61,274



53,755


Research and development

34,868



29,067



66,412



57,359


Amortization of intangible assets

1,355



1,820



3,313



3,637


Acquisition-related costs

1,379





1,730




Restructuring



9



91



426


Total operating expenses

65,376



58,227



132,820



115,177


Income from operations

83,114



11,076



137,156



24,490


Other income (expense):








Interest income

586



2,675



1,237



5,514


Interest expense

(74)



(661)



(106)



(1,244)


Income before income taxes

83,626



13,090



138,287



28,760


Income tax expense

12,212



1,162



18,510



3,295


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

94



40



94



100


Net income

$

71,320



$

11,888



$

119,683



$

25,365










Net income per share:








Basic

$

1.15



$

0.19



$

1.93



$

0.40


Diluted

$

1.13



$

0.19



$

1.90



$

0.39










Cash dividends declared per share

$

0.14



$

0.12



$

0.28



$

0.24










Weighted average shares outstanding:








Basic

62,068



63,679



62,023



63,675


Diluted

63,237



64,219



63,118



64,266











Three months ended


Six months ended

Supplemental financial data:

April 3, 2021


March 28, 2020


April 3, 2021


March 28, 2020

Depreciation and amortization

$

4,600



$

4,769



$

9,747



$

9,528


Capital expenditures

5,121



2,775



8,808



5,099


Equity-based compensation expense:








Cost of sales

210



183



415



415


Selling, general and administrative

2,824



2,695



5,103



5,430


Research and development

929



844



1,846



1,486


Total equity-based compensation expense

$

3,963



$

3,722



$

7,364



$

7,331







As of


April 3, 2021


March 28, 2020

Backlog of orders 1

$

664,831



$

136,353


Number of employees

3,434



2,929




1.

Represents customer purchase commitments. While the Company believes these orders are firm, they are generally cancellable by customers without penalty.

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands)

(Unaudited)




As of


April 3, 2021


October 3, 2020

ASSETS

CURRENT ASSETS




Cash and cash equivalents

$

257,333



$

188,127


Short-term investments

307,000



342,000


Accounts and other receivable, net of allowance for doubtful accounts of $942 and $968, respectively

307,934



198,640


Inventories, net

139,999



111,809


Prepaid expenses and other current assets

23,471



19,620


TOTAL CURRENT ASSETS

1,035,737



860,196






Property, plant and equipment, net

61,965



59,147


Operating right-of-use assets

21,346



22,688


Goodwill

73,548



56,695


Intangible assets, net

46,046



37,972


Deferred tax assets

9,668



8,147


Equity investments

6,371



7,535


Other assets

2,292



2,186


TOTAL ASSETS

$

1,256,973



$

1,054,566






LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES




Accounts payable

123,832



57,688


Operating lease liabilities

6,171



5,903


Accrued expenses and other current liabilities

104,386



76,762


Income taxes payable

25,183



17,540


TOTAL CURRENT LIABILITIES

259,572



157,893






Deferred income taxes

33,395



33,005


Income taxes payable

67,234



74,957


Operating lease liabilities

16,741



18,325


Other liabilities

13,171



12,392


TOTAL LIABILITIES

390,113



296,572






SHAREHOLDERS' EQUITY




Common stock, no par value

542,112



539,213


Treasury stock, at cost

(392,680)



(394,817)


Retained earnings

718,427



616,119


Accumulated other comprehensive loss

(999)



(2,521)


TOTAL SHAREHOLDERS' EQUITY

$

866,860



$

757,994






TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,256,973



$

1,054,566


KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)






Three months ended


Six months ended


April 3, 2021


March 28, 2020


April 3, 2021


March 28, 2020

Net cash provided by operating activities

$

27,085



$

14,055



$

85,720



$

39,083


Net cash provided by/(used in) investing activities

1,775



(131,466)



1,999



(24,979)


Net cash (used in)/provided by financing activities

(9,910)



12,106



(19,117)



14,258


Effect of exchange rate changes on cash and cash equivalents

(1,287)



238



604



(239)


Changes in cash and cash equivalents

17,663



(105,067)



69,206



28,123


Cash and cash equivalents, beginning of period

239,670



497,374



188,127



364,184


Cash and cash equivalents, end of period

$

257,333



$

392,307



$

257,333



$

392,307










Short-term investments

307,000



248,000



307,000



248,000


Total cash, cash equivalents and short-term investments

$

564,333



$

640,307



$

564,333



$

640,307


Reconciliation of U.S. GAAP

to Non-GAAP Income from Operation and Operating Margin

(In thousands, except percentages)

(Unaudited)






Three months ended



April 3, 2021


March 28, 2020


January 2, 2021

Net revenue


$

340,163



$

150,741



$

267,857


U.S. GAAP income from operations


83,114



11,076



54,042


U.S. GAAP operating margin


24.4

%


7.3

%


20.2

%








Pre-tax non-GAAP items:







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


1,355



1,820



1,958


Restructuring




9



91


Equity-based compensation (a)


3,963



3,722



3,401


Acquisition-related costs


1,379





351


Non-GAAP income from operations


$

89,811



$

16,627



$

59,843


Non-GAAP operating margin


26.4

%


11.0

%


22.3

%



(a)

This non-GAAP measure is newly included for the three months ended January 2, 2021. Comparatives have been included.

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 percentages and per share data)

(Unaudited)






Three months ended



April 3, 2021


March 28, 2020


January 2, 2021

Net revenue


$

340,163



$

150,741



$

267,857


U.S. GAAP net income


71,320



11,888



48,363


U.S. GAAP net margin


21.0

%


7.9

%


18.1

%








Non-GAAP adjustments:







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


1,355



1,820



1,958


Restructuring




9



91


Equity-based compensation


3,963



3,722



3,401


Acquisition-related costs


1,379





351


Income tax effects on non-GAAP items


1,429



(432)



(474)


Total non-GAAP adjustments


$

8,126



$

5,119



$

5,327


Non-GAAP net income


$

79,446



$

17,007



$

53,690


Non-GAAP net margin


23.4

%


11.3

%


20.0

%








U.S. GAAP net income per share:







Basic


1.15



0.19



0.78


Diluted(a)


1.13



0.19



0.77









Non-GAAP adjustments per share:(b)







Basic


0.13



0.08



0.09


Diluted


0.13



0.07



0.09









Non-GAAP net income per share:







Basic


$

1.28



$

0.27



$

0.87


Diluted(c)


$

1.26



$

0.26



$

0.86




(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 include amortization related to intangible assets acquired through business combinations, costs associated with restructuring, equity-based compensation expenses and acquisition-related costs as well as income tax effects 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.

Cision
Cision

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SOURCE Kulicke & Soffa Industries, Inc.